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☒
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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☐
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TRANSITION REPORT PURSUANT TO 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
|
A large depression on the earth’s surface in which sediments accumulate.
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Bbl or barrel
|
One stock tank barrel, or 42 U.S. gallons liquid volume, used in reference to crude oil, natural gas liquids or other liquid hydrocarbons.
|
Bbl/d
|
Bbl per day.
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BOE
|
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
|
Boe per day.
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British Thermal Unit or Btu
|
The quantity of heat required to raise the temperature of one pound of water by one degree Fahrenheit.
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Completion
|
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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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 or dry well
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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
|
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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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
|
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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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
|
One million British Thermal Units per day.
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MMcf
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One million cubic feet of natural gas.
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Natural gas
|
Hydrocarbon gas found in the earth, composed of methane, ethane, butane, propane and other gases.
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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
|
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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Reservoir
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A porous and permeable underground formation containing a natural accumulation of producible natural gas and/or crude oil that is confined by impermeable rock or water barriers and is separate from other reservoirs.
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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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Diamondback
|
Diamondback Energy, Inc., a Delaware corporation, and its subsidiaries other than the Partnership and its subsidiaries (including the Operating Company).
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Exchange Act
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The Securities Exchange Act of 1934, as amended.
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FERC
|
Federal Energy Regulatory Commission.
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GAAP
|
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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IPO
|
The Partnership’s initial public offering.
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Nasdaq
|
The Nasdaq Global Select Market.
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Operating Company
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Rattler Midstream Operating LLC, a Delaware limited liability company and a consolidated subsidiary of the Partnership.
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Partnership
|
Rattler Midstream LP, a Delaware limited partnership.
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Predecessor
|
The Operating Company, prior to May 28, 2019 for accounting purposes.
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SEC
|
Securities and Exchange Commission.
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Securities Act
|
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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•
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the volatility of oil, NGL and natural gas prices, including in Diamondback’s area of operation in the Permian Basin, and the extent and duration of price reductions and increased production by the Organization of the Petroleum Exporting Countries (“OPEC”) members and other oil exporting nations;
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•
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the threat, occurrence, potential duration or other implications of epidemic or pandemic diseases, including the recent outbreak of a highly transmissible and pathogenic strain of coronavirus (“COVID-19”), or any government response to such occurrence or threat;
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•
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changes in general economic, business or industry conditions;
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•
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competitive conditions in our industry and the effect of U.S. energy, monetary and trade policies;
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•
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U.S. and global economic conditions and political and economic developments, including the outcome of the U.S. presidential election and resulting energy and environmental policies;
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•
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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;
|
•
|
our ability to complete internal growth projects on time and on budget;
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•
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our ability to identify, complete and effectively integrate acquisitions into our operations;
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•
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our ability to achieve anticipated synergies, system optionality and accretion associated with acquisitions;
|
•
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the impact of potential impairment charges;
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•
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the results of our investments in joint ventures;
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•
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the price and availability of debt and equity financing;
|
•
|
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;
|
•
|
energy efficiency and technology trends;
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•
|
operating hazards and other risks incidental to our midstream services;
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•
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natural disasters, weather-related delays, casualty losses and other matters beyond our control;
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•
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interest rates;
|
•
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labor relations;
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•
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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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•
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changes in availability and cost of capital;
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•
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increases in our tax liability;
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•
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the effect of existing and future laws and government regulations;
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•
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terrorist attacks or cyber threats;
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•
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the effects of future litigation; and
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•
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certain factors discussed elsewhere in this report.
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March 31,
|
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December 31,
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||||
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2020
|
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2019
|
||||
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(In thousands)
|
||||||
Assets
|
|
|
|
||||
Current assets:
|
|
|
|
||||
Cash
|
$
|
16,183
|
|
|
$
|
10,633
|
|
Accounts receivable—related party
|
18,244
|
|
|
50,270
|
|
||
Accounts receivable—third party, net
|
10,782
|
|
|
9,071
|
|
||
Sourced water inventory
|
13,265
|
|
|
14,325
|
|
||
Other current assets
|
1,051
|
|
|
1,428
|
|
||
Total current assets
|
59,525
|
|
|
85,727
|
|
||
Property, plant and equipment:
|
|
|
|
||||
Land
|
88,309
|
|
|
88,509
|
|
||
Property, plant and equipment
|
987,336
|
|
|
930,768
|
|
||
Accumulated depreciation, amortization and accretion
|
(71,604
|
)
|
|
(61,132
|
)
|
||
Property, plant and equipment, net
|
1,004,041
|
|
|
958,145
|
|
||
Right of use assets
|
171
|
|
|
418
|
|
||
Equity method investments
|
502,040
|
|
|
479,558
|
|
||
Real estate assets, net
|
97,580
|
|
|
98,679
|
|
||
Intangible lease assets, net
|
7,274
|
|
|
8,070
|
|
||
Other assets
|
5,584
|
|
|
5,796
|
|
||
Total assets
|
$
|
1,676,215
|
|
|
$
|
1,636,393
|
|
|
March 31,
|
|
December 31,
|
||||
|
2020
|
|
2019
|
||||
|
(In thousands, except unit amounts)
|
||||||
Liabilities and Unitholders’ Equity
|
|
|
|
|
|
||
Current liabilities:
|
|
|
|
|
|
||
Accounts payable
|
$
|
36
|
|
|
$
|
147
|
|
Accrued liabilities
|
72,906
|
|
|
76,625
|
|
||
Taxes payable
|
336
|
|
|
189
|
|
||
Short-term lease liability
|
171
|
|
|
418
|
|
||
Total current liabilities
|
73,449
|
|
|
77,379
|
|
||
Long-term debt
|
451,000
|
|
|
424,000
|
|
||
Asset retirement obligations
|
12,525
|
|
|
11,347
|
|
||
Deferred income taxes
|
11,483
|
|
|
7,827
|
|
||
Total liabilities
|
548,457
|
|
|
520,553
|
|
||
Commitments and contingencies (Note 17)
|
|
|
|
||||
Unitholders' equity:
|
|
|
|
||||
General partner—Diamondback
|
959
|
|
|
979
|
|
||
Common units—public (43,700,000 units issued and outstanding as of March 31, 2020 and as of December 31, 2019)
|
739,702
|
|
|
737,777
|
|
||
Class B units—Diamondback (107,815,152 units issued and outstanding as of March 31, 2020 and as of December 31, 2019)
|
959
|
|
|
979
|
|
||
Accumulated other comprehensive loss
|
(261
|
)
|
|
(198
|
)
|
||
Total Rattler Midstream LP unitholders’ equity
|
741,359
|
|
|
739,537
|
|
||
Non-controlling interest
|
387,219
|
|
|
376,928
|
|
||
Non-controlling interest in accumulated other comprehensive loss
|
(820
|
)
|
|
(625
|
)
|
||
Total equity
|
1,127,758
|
|
|
1,115,840
|
|
||
Total liabilities and unitholders’ equity
|
$
|
1,676,215
|
|
|
$
|
1,636,393
|
|
|
Three Months Ended March 31,
|
||||||
|
2020
|
|
2019*
|
||||
|
|
|
Predecessor
|
||||
|
(In thousands, expect per unit amounts)
|
||||||
Revenues:
|
|
|
|
||||
Revenues—related party
|
$
|
116,583
|
|
|
$
|
88,576
|
|
Revenues—third party
|
9,100
|
|
|
3,487
|
|
||
Rental income—related party
|
1,402
|
|
|
715
|
|
||
Rental income—third party
|
1,901
|
|
|
2,067
|
|
||
Other real estate income—related party
|
116
|
|
|
73
|
|
||
Other real estate income—third party
|
293
|
|
|
258
|
|
||
Total revenues
|
129,395
|
|
|
95,176
|
|
||
Costs and expenses:
|
|
|
|
||||
Direct operating expenses
|
32,874
|
|
|
20,186
|
|
||
Cost of goods sold (exclusive of depreciation and amortization)
|
15,961
|
|
|
13,053
|
|
||
Real estate operating expenses
|
728
|
|
|
526
|
|
||
Depreciation, amortization and accretion
|
12,506
|
|
|
9,904
|
|
||
General and administrative expenses
|
4,514
|
|
|
1,369
|
|
||
Loss on disposal of property, plant and equipment
|
1,538
|
|
|
—
|
|
||
Total costs and expenses
|
68,121
|
|
|
45,038
|
|
||
Income from operations
|
61,274
|
|
|
50,138
|
|
||
Other income (expense):
|
|
|
|
||||
Interest expense, net
|
(2,621
|
)
|
|
—
|
|
||
(Loss) income from equity method investments
|
(245
|
)
|
|
50
|
|
||
Total other income (expense), net
|
(2,866
|
)
|
|
50
|
|
||
Net income before income taxes
|
58,408
|
|
|
50,188
|
|
||
Provision for income taxes
|
3,820
|
|
|
10,832
|
|
||
Net income after taxes
|
$
|
54,588
|
|
|
$
|
39,356
|
|
Net income attributable to non-controlling interest
|
41,557
|
|
|
|
|||
Net income attributable to Rattler Midstream LP
|
$
|
13,031
|
|
|
|
||
|
|
|
|
||||
Net income attributable to limited partners per common unit:
|
|
|
|
||||
Basic
|
$
|
0.28
|
|
|
|
|
|
Diluted
|
$
|
0.28
|
|
|
|
|
|
Weighted average number of limited partner common units outstanding:
|
|
|
|
||||
Basic
|
43,700
|
|
|
|
|
||
Diluted
|
43,700
|
|
|
|
|
|
Three Months Ended March 31,
|
||||||
|
2020
|
|
2019*
|
||||
|
|
|
Predecessor
|
||||
|
(In thousands)
|
||||||
Net Income
|
$
|
54,588
|
|
|
$
|
39,356
|
|
Other comprehensive income:
|
|
|
|
||||
Change in accumulated other comprehensive loss of equity method investees attributable to non-controlling interest
|
(195
|
)
|
|
—
|
|
||
Change in accumulated other comprehensive loss of equity method investees attributable to limited partner
|
(63
|
)
|
|
—
|
|
||
Total other comprehensive income
|
(258
|
)
|
|
—
|
|
||
Comprehensive income
|
$
|
54,330
|
|
|
$
|
39,356
|
|
|
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
|
|
|
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 December 31, 2019
|
43,700
|
|
$
|
737,777
|
|
107,815
|
|
$
|
979
|
|
$
|
979
|
|
$
|
376,928
|
|
$
|
(198
|
)
|
$
|
(625
|
)
|
$
|
1,115,840
|
|
Unit-based compensation
|
|
2,219
|
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
2,219
|
|
|||||||||
Distribution equivalent rights
payments |
|
(652
|
)
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
(652
|
)
|
|||||||||
Other comprehensive income
|
|
—
|
|
|
—
|
|
—
|
|
—
|
|
(63
|
)
|
(195
|
)
|
(258
|
)
|
|||||||||
Distributions
|
|
(12,673
|
)
|
|
(20
|
)
|
(20
|
)
|
(31,266
|
)
|
—
|
|
—
|
|
(43,979
|
)
|
|||||||||
Net income
|
|
13,031
|
|
|
—
|
|
—
|
|
41,557
|
|
—
|
|
—
|
|
54,588
|
|
|||||||||
Balance at March 31, 2020
|
43,700
|
|
$
|
739,702
|
|
107,815
|
|
$
|
959
|
|
$
|
959
|
|
$
|
387,219
|
|
$
|
(261
|
)
|
$
|
(820
|
)
|
$
|
1,127,758
|
|
|
Three Months Ended March 31,
|
||||||
|
2020
|
|
2019*
|
||||
|
|
|
Predecessor
|
||||
|
(In thousands)
|
||||||
Cash flows from operating activities:
|
|
|
|
||||
Net income
|
$
|
54,588
|
|
|
$
|
39,356
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
||||
Provision for deferred income taxes
|
3,820
|
|
|
2,867
|
|
||
Depreciation, amortization and accretion
|
12,506
|
|
|
9,904
|
|
||
Loss on disposal of property, plant and equipment
|
1,538
|
|
|
—
|
|
||
Unit-based compensation expense
|
2,219
|
|
|
—
|
|
||
Loss (income) from equity method investments
|
245
|
|
|
(50
|
)
|
||
Changes in operating assets and liabilities:
|
|
|
|
||||
Accounts receivable—related party
|
31,674
|
|
|
(15,516
|
)
|
||
Accounts receivable—third party
|
(1,711
|
)
|
|
625
|
|
||
Accounts payable, accrued liabilities and taxes payable
|
(8,540
|
)
|
|
19,578
|
|
||
Other
|
1,648
|
|
|
(1,524
|
)
|
||
Net cash provided by operating activities
|
97,987
|
|
|
55,240
|
|
||
Cash flows from investing activities:
|
|
|
|
||||
Additions to property, plant and equipment
|
(52,046
|
)
|
|
(51,743
|
)
|
||
Contributions to equity method investments
|
(32,563
|
)
|
|
—
|
|
||
Distributions from equity method investments
|
9,761
|
|
|
—
|
|
||
Proceeds from the sale of fixed assets
|
42
|
|
|
—
|
|
||
Net cash used in investing activities
|
(74,806
|
)
|
|
(51,743
|
)
|
||
Cash flows from financing activities:
|
|
|
|
||||
Proceeds from borrowings from credit facility
|
27,000
|
|
|
—
|
|
||
Distribution equivalent rights
|
(652
|
)
|
|
—
|
|
||
Distribution to General Partner (Note 1)
|
(20
|
)
|
|
—
|
|
||
Distribution to public (Note 1)
|
(12,673
|
)
|
|
—
|
|
||
Distribution to Diamondback (Note 1)
|
(31,286
|
)
|
|
—
|
|
||
Net cash used in financing activities
|
(17,631
|
)
|
|
—
|
|
||
Net increase in cash
|
5,550
|
|
|
3,497
|
|
||
Cash at beginning of period
|
10,633
|
|
|
8,564
|
|
||
Cash at end of period
|
$
|
16,183
|
|
|
$
|
12,061
|
|
Supplemental disclosure of cash flow information:
|
|
|
|
||||
Interest paid
|
$
|
2,978
|
|
|
$
|
—
|
|
Supplemental disclosure of non-cash transactions:
|
|
|
|
||||
Asset retirement obligations acquired
|
$
|
1,038
|
|
|
$
|
3,992
|
|
Supplemental disclosure of non-cash financing activity:
|
|
|
|
||||
Contributions from Diamondback
|
$
|
—
|
|
|
$
|
458,674
|
|
Supplemental disclosure of non-cash investing activity:
|
|
|
|
||||
Increase in long term assets and inventory due to contributions from Diamondback
|
$
|
—
|
|
|
$
|
449,441
|
|
Change in accrued liabilities related to property, plant and equipment
|
$
|
5,063
|
|
|
$
|
15,856
|
|
Decrease in current liabilities
|
$
|
—
|
|
|
$
|
9,233
|
|
|
As of
|
||||||
|
March 31, 2020
|
|
December 31, 2019
|
||||
|
(In thousands)
|
||||||
Capital expenditures accrued
|
$
|
46,871
|
|
|
$
|
42,160
|
|
Direct operating expense accrued
|
18,343
|
|
|
22,119
|
|
||
Sourced water purchases accrued
|
4,709
|
|
|
9,531
|
|
||
Other
|
2,983
|
|
|
2,815
|
|
||
Total accrued liabilities
|
$
|
72,906
|
|
|
$
|
76,625
|
|
|
(In thousands)
|
||
Balance as of December 31, 2019
|
$
|
(823
|
)
|
Other comprehensive loss
|
(258
|
)
|
|
Balance as of March 31, 2020
|
$
|
(1,081
|
)
|
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.
|
ASU 2020-04, “Rate Reform (Topic 848)”
|
This update provides optional expedients and exceptions for applying GAAP to contracts, hedging relationships, and other transactions that reference LIBOR.
|
Q1 2020
|
The Partnership adopted this update upon issuance and elected to use the optional expedient for contracts that reference LIBOR. The amendments in this update expire on December 31, 2022. The adoption of this update did not have an impact on its financial position, results of operations or liquidity.
|
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 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.
|
|
Three Months Ended March 31,
|
|
|
||||||
|
2020
|
|
2019
|
|
Segment
|
||||
|
(In thousands)
|
|
|
||||||
Type of Service:
|
|
|
|
|
|
||||
Sourced water gathering
|
$
|
30,767
|
|
|
$
|
24,896
|
|
|
Midstream
|
Produced water gathering and disposal
|
81,348
|
|
|
58,802
|
|
|
Midstream
|
||
Crude oil gathering
|
7,777
|
|
|
5,912
|
|
|
Midstream
|
||
Natural gas gathering
|
4,930
|
|
|
2,452
|
|
|
Midstream
|
||
Surface revenue (non ASC 606 revenues)
|
861
|
|
|
—
|
|
|
Midstream
|
||
Real estate contracts (non ASC 606 revenues)
|
3,712
|
|
|
3,114
|
|
|
Real Estate
|
||
Total revenues
|
$
|
129,395
|
|
|
$
|
95,176
|
|
|
|
|
|
|
As of
|
||||||
|
Estimated Useful Lives
|
|
March 31, 2020
|
|
December 31, 2019
|
||||
|
(Years)
|
|
(In thousands)
|
||||||
Buildings
|
20-30
|
|
$
|
102,440
|
|
|
$
|
102,375
|
|
Tenant improvements
|
15
|
|
4,501
|
|
|
4,501
|
|
||
Land improvements
|
15
|
|
484
|
|
|
484
|
|
||
Total real estate assets
|
|
|
107,425
|
|
|
107,360
|
|
||
Less: accumulated depreciation
|
|
|
(9,845
|
)
|
|
(8,681
|
)
|
||
Total investment in real estate, net
|
|
|
$
|
97,580
|
|
|
$
|
98,679
|
|
|
|
|
As of
|
||||||
|
Weighted Average Useful Lives
|
|
March 31, 2020
|
|
December 31, 2019
|
||||
|
(Months)
|
|
(In thousands)
|
||||||
In-place lease intangibles
|
45
|
|
$
|
11,344
|
|
|
$
|
11,389
|
|
Less: accumulated amortization
|
|
|
(6,527
|
)
|
|
(5,927
|
)
|
||
In-place lease intangibles, net
|
|
|
4,817
|
|
|
5,462
|
|
||
|
|
|
|
|
|
||||
Above-market lease intangibles
|
45
|
|
3,623
|
|
|
3,623
|
|
||
Less: accumulated amortization
|
|
|
(1,166
|
)
|
|
(1,015
|
)
|
||
Above-market lease intangibles, net
|
|
|
2,457
|
|
|
2,608
|
|
||
Total intangible lease assets, net
|
|
|
$
|
7,274
|
|
|
$
|
8,070
|
|
Remainder of
|
|
|
|
|
|
|
|
|
||||||||||
2020
|
|
2021
|
|
2022
|
|
2023
|
|
2024
|
||||||||||
$
|
2,023
|
|
|
$
|
2,480
|
|
|
$
|
520
|
|
|
$
|
585
|
|
|
$
|
673
|
|
|
|
|
As of
|
||||||
|
Estimated
|
|
March 31,
|
|
December 31,
|
||||
|
Useful Lives
|
|
2020
|
|
2019
|
||||
|
(Years)
|
|
(In thousands)
|
||||||
Produced water disposal systems
|
10-30
|
|
$
|
634,739
|
|
|
$
|
600,797
|
|
Crude oil gathering systems(1)
|
30
|
|
131,692
|
|
|
129,658
|
|
||
Natural gas gathering and compression systems(1)
|
10-30
|
|
111,252
|
|
|
98,426
|
|
||
Sourced water gathering systems(1)
|
30
|
|
109,653
|
|
|
101,887
|
|
||
Total property, plant and equipment
|
|
|
987,336
|
|
|
930,768
|
|
||
Land
|
N/A
|
|
88,309
|
|
|
88,509
|
|
||
Less: accumulated depreciation, amortization and accretion
|
|
|
(71,604
|
)
|
|
(61,132
|
)
|
||
Total property, plant and equipment, net
|
|
|
$
|
1,004,041
|
|
|
$
|
958,145
|
|
|
|
|
|
|
|
(1)
|
Included in gathering systems are $116.7 million and $138.6 million of assets at March 31, 2020 and December 31, 2019, respectively, that are not subject to depreciation, amortization and accretion as the systems were under construction and had not yet been put into service.
|
|
Three Months Ended March 31,
|
||||||
|
2020
|
|
2019
|
||||
|
(In thousands)
|
||||||
Asset retirement obligation, beginning of period
|
$
|
11,347
|
|
|
$
|
561
|
|
Liabilities incurred
|
1,038
|
|
|
3,992
|
|
||
Liabilities settled
|
(106
|
)
|
|
—
|
|
||
Accretion expense during period
|
246
|
|
|
77
|
|
||
Asset retirement obligation, end of period
|
$
|
12,525
|
|
|
$
|
4,630
|
|
|
|
Ownership Interest
|
|
March 31, 2020
|
|
December 31, 2019
|
|||||
|
|
|
|
(In thousands)
|
|||||||
EPIC Crude Holdings, LP
|
|
10
|
%
|
|
$
|
117,348
|
|
|
$
|
109,806
|
|
Gray Oak Pipeline, LLC
|
|
10
|
%
|
|
121,462
|
|
|
115,840
|
|
||
Wink to Webster Pipeline LLC
|
|
4
|
%
|
|
45,450
|
|
|
34,124
|
|
||
OMOG JV LLC
|
|
60
|
%
|
|
215,668
|
|
|
219,098
|
|
||
Amarillo Rattler, LLC
|
|
50
|
%
|
|
2,112
|
|
|
690
|
|
||
Total
|
|
|
|
$
|
502,040
|
|
|
$
|
479,558
|
|
|
|
Three Months Ended March 31,
|
||||||
|
|
2020
|
|
2019
|
||||
|
|
(In thousands)
|
||||||
EPIC Crude Holdings, LP
|
|
$
|
(2,183
|
)
|
|
$
|
—
|
|
Gray Oak Pipeline, LLC
|
|
582
|
|
|
50
|
|
||
Wink to Webster Pipeline LLC
|
|
188
|
|
|
—
|
|
||
OMOG JV LLC
|
|
1,334
|
|
|
—
|
|
||
Amarillo Rattler, LLC
|
|
(166
|
)
|
|
—
|
|
||
Total
|
|
$
|
(245
|
)
|
|
$
|
50
|
|
|
March 31, 2020
|
|
December 31, 2019
|
||||
|
(In thousands)
|
||||||
Operating Company revolving credit facility
|
$
|
451,000
|
|
|
$
|
424,000
|
|
Total long-term debt
|
$
|
451,000
|
|
|
$
|
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 December 31, 2019
|
2,226,895
|
|
|
$
|
19.14
|
|
Granted
|
20,910
|
|
|
$
|
13.85
|
|
Forfeited
|
(569
|
)
|
|
$
|
15.57
|
|
Unvested at March 31, 2020
|
2,247,236
|
|
|
$
|
19.09
|
|
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
|
April 30, 2020
|
|
Q1 2020
|
|
$
|
0.29
|
|
|
May 26, 2020
|
|
Three Months Ended March 31, 2020
|
||
|
(In thousands, except per unit amounts)
|
||
Net income attributable to Rattler Midstream LP
|
$
|
13,031
|
|
Less: net income allocated to participating securities(1)
|
(652
|
)
|
|
Net income attributable to common unitholders
|
$
|
12,379
|
|
Weighted average common units outstanding:
|
|
||
Basic weighted average common units outstanding
|
43,700
|
|
|
Diluted weighted average common units outstanding
|
43,700
|
|
|
Net income per common unit, basic
|
$
|
0.28
|
|
Net income per common unit, diluted
|
$
|
0.28
|
|
(1)
|
Distribution equivalent rights granted to employees are considered participating securities.
|
|
Three Months Ended March 31, 2020
|
|
|
(In thousands)
|
|
Phantom units
|
2,247
|
|
|
Three Months Ended March 31, 2020
|
|
Three Months Ended March 31, 2019
|
||||
|
(In thousands)
|
||||||
Operating lease costs
|
$
|
237
|
|
|
$
|
393
|
|
|
As of March 31, 2020
|
||
|
(In thousands)
|
||
2020 (April - December)
|
$
|
174
|
|
2021
|
—
|
|
|
2022
|
—
|
|
|
2023
|
—
|
|
|
2024
|
—
|
|
|
Thereafter
|
—
|
|
|
Total lease payments
|
174
|
|
|
Less: interest
|
3
|
|
|
Present value of lease liabilities
|
$
|
171
|
|
|
Three Months Ended March 31, 2020
|
|
Three Months Ended March 31, 2019
|
||||||||||||||||||||
|
Midstream Services
|
|
Real Estate Operations
|
|
Total
|
|
Midstream Services
|
|
Real Estate Operations
|
|
Total
|
||||||||||||
|
(In thousands)
|
||||||||||||||||||||||
Revenues—related party
|
$
|
116,583
|
|
|
$
|
—
|
|
|
$
|
116,583
|
|
|
$
|
88,576
|
|
|
$
|
—
|
|
|
$
|
88,576
|
|
Revenues—third party
|
9,100
|
|
|
—
|
|
|
9,100
|
|
|
3,487
|
|
|
—
|
|
|
3,487
|
|
||||||
Rental income—related party
|
—
|
|
|
1,402
|
|
|
1,402
|
|
|
—
|
|
|
715
|
|
|
715
|
|
||||||
Rental income—third party
|
—
|
|
|
1,901
|
|
|
1,901
|
|
|
—
|
|
|
2,067
|
|
|
2,067
|
|
||||||
Other real estate income—related party
|
—
|
|
|
116
|
|
|
116
|
|
|
—
|
|
|
73
|
|
|
73
|
|
||||||
Other real estate income—third party
|
—
|
|
|
293
|
|
|
293
|
|
|
—
|
|
|
258
|
|
|
258
|
|
||||||
Total revenues
|
125,683
|
|
|
3,712
|
|
|
129,395
|
|
|
92,063
|
|
|
3,113
|
|
|
95,176
|
|
||||||
Direct operating expenses
|
32,874
|
|
|
—
|
|
|
32,874
|
|
|
20,186
|
|
|
—
|
|
|
20,186
|
|
||||||
Cost of goods sold (exclusive of depreciation and amortization)
|
15,961
|
|
|
—
|
|
|
15,961
|
|
|
13,053
|
|
|
—
|
|
|
13,053
|
|
||||||
Real estate operating expenses
|
—
|
|
|
728
|
|
|
728
|
|
|
—
|
|
|
526
|
|
|
526
|
|
||||||
Depreciation, amortization and accretion
|
10,742
|
|
|
1,764
|
|
|
12,506
|
|
|
7,958
|
|
|
1,946
|
|
|
9,904
|
|
||||||
Loss on disposal of property, plant and equipment
|
1,538
|
|
|
—
|
|
|
1,538
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Loss (income) from equity method investments
|
245
|
|
|
—
|
|
|
245
|
|
|
(50
|
)
|
|
—
|
|
|
(50
|
)
|
||||||
Segment profit
|
64,323
|
|
|
1,220
|
|
|
65,543
|
|
|
50,916
|
|
|
641
|
|
|
51,557
|
|
||||||
General and administrative expenses
|
|
|
|
|
(4,514
|
)
|
|
|
|
|
|
(1,369
|
)
|
||||||||||
Interest expense, net
|
|
|
|
|
(2,621
|
)
|
|
|
|
|
|
—
|
|
||||||||||
Net income before income taxes
|
64,323
|
|
|
1,220
|
|
|
58,408
|
|
|
50,916
|
|
|
641
|
|
|
50,188
|
|
||||||
Provision for income taxes
|
|
|
|
|
3,820
|
|
|
|
|
|
|
10,832
|
|
||||||||||
Net income
|
$
|
64,323
|
|
|
$
|
1,220
|
|
|
$
|
54,588
|
|
|
$
|
50,916
|
|
|
$
|
641
|
|
|
$
|
39,356
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
As of March 31, 2020
|
|
As of December 31, 2019
|
||||||||||||||||||||
Segment assets
|
$
|
1,504,591
|
|
|
$
|
106,344
|
|
|
$
|
1,676,215
|
|
|
$
|
1,435,659
|
|
|
$
|
108,239
|
|
|
$
|
1,636,393
|
|
•
|
average crude oil gathering volumes were 97,293 Bbl/d, an increase of 30% year over year;
|
•
|
average natural gas gathering volumes were 117,761 MMBtu/d, an increase of 95% year over year;
|
•
|
average produced water gathering and disposal volumes were 941,628 Bbl/d, an increase of 32% year over year; and
|
•
|
average sourced water gathering volumes were 446,713 Bbl/d, an increase of 27% year over year.
|
(miles)(1)
|
Delaware Basin
|
|
Midland Basin
|
|
Permian Total
|
|||
Crude oil
|
106
|
|
|
44
|
|
|
150
|
|
Natural gas
|
149
|
|
|
—
|
|
|
149
|
|
Produced water
|
261
|
|
|
221
|
|
|
482
|
|
Sourced water
|
32
|
|
|
73
|
|
|
105
|
|
Total
|
548
|
|
|
338
|
|
|
886
|
|
(capacity/capability)(1)
|
Delaware Basin
|
|
Midland Basin
|
|
Permian Total
|
|
Utilization
|
||||
Crude oil gathering (Bbl/d)
|
180,000
|
|
|
56,000
|
|
|
236,000
|
|
|
41
|
%
|
Natural gas compression (Mcf/d)
|
135,000
|
|
|
—
|
|
|
135,000
|
|
|
63
|
%
|
Natural gas gathering (Mcf/d)
|
150,000
|
|
|
—
|
|
|
150,000
|
|
|
56
|
%
|
Produced water gathering and disposal (Bbl/d)
|
1,660,500
|
|
|
1,872,300
|
|
|
3,532,800
|
|
|
28
|
%
|
Sourced water (Bbl/d)
|
120,000
|
|
|
455,000
|
|
|
575,000
|
|
|
78
|
%
|
(1)
|
Does not include assets of EPIC, Gray Oak, Wink to Webster, Amarillo Rattler or OMOG joint ventures.
|
|
Three Months Ended March 31,
|
||||
(throughput)(1)
|
2020
|
|
2019
|
||
Crude oil gathering volumes (Bbl/d)
|
97,293
|
|
|
74,567
|
|
Natural gas gathering volumes (MMBtu/d)
|
117,761
|
|
|
60,534
|
|
Produced water gathering and disposal volumes (Bbl/d)
|
941,628
|
|
|
711,198
|
|
Sourced water gathering volumes (Bbl/d)
|
446,713
|
|
|
352,603
|
|
(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
|
|
$
|
127,039
|
|
|
$
|
12,961
|
|
Gray Oak Pipeline, LLC
|
|
10
|
%
|
|
February 15, 2019
|
|
$
|
124,521
|
|
|
$
|
21,479
|
|
Wink to Webster Pipeline LLC
|
|
4
|
%
|
|
July 30, 2019
|
|
$
|
44,644
|
|
|
$
|
63,356
|
|
OMOG JV LLC
|
|
60
|
%
|
|
October 1, 2019
|
|
$
|
218,555
|
|
|
$
|
—
|
|
Amarillo Rattler, LLC
|
|
50
|
%
|
|
December 20, 2019
|
|
$
|
1,700
|
|
|
$
|
48,300
|
|
|
Three Months Ended March 31,
|
||||||||
|
2020
|
|
2019
|
||||||
|
(In thousands, except operating data)
|
||||||||
Revenues:
|
|
|
|
|
|
||||
Revenues—related party
|
|
$
|
116,583
|
|
|
|
$
|
88,576
|
|
Revenues—third party
|
|
9,100
|
|
|
|
3,487
|
|
||
Rental income—related party
|
|
1,402
|
|
|
|
715
|
|
||
Rental income—third party
|
|
1,901
|
|
|
|
2,067
|
|
||
Other real estate income—related party
|
|
116
|
|
|
|
73
|
|
||
Other real estate income—third party
|
|
293
|
|
|
|
258
|
|
||
Total revenues
|
|
129,395
|
|
|
|
95,176
|
|
||
Costs and expenses:
|
|
|
|
|
|
||||
Direct operating expenses
|
|
32,874
|
|
|
|
20,186
|
|
||
Cost of goods sold (exclusive of depreciation and amortization)
|
|
15,961
|
|
|
|
13,053
|
|
||
Real estate operating expenses
|
|
728
|
|
|
|
526
|
|
||
Depreciation, amortization and accretion
|
|
12,506
|
|
|
|
9,904
|
|
||
General and administrative expenses
|
|
4,514
|
|
|
|
1,369
|
|
||
Loss on disposal of property, plant and equipment
|
|
1,538
|
|
|
|
—
|
|
||
Total costs and expenses
|
|
68,121
|
|
|
|
45,038
|
|
||
Income from operations
|
|
61,274
|
|
|
|
50,138
|
|
||
Other income (expense):
|
|
|
|
|
|
||||
Interest expense, net
|
|
(2,621
|
)
|
|
|
—
|
|
||
(Loss) income from equity method investments
|
|
(245
|
)
|
|
|
50
|
|
||
Total other income (expense), net
|
|
(2,866
|
)
|
|
|
50
|
|
||
Net income before income taxes
|
|
58,408
|
|
|
|
50,188
|
|
||
Provision for income taxes
|
|
3,820
|
|
|
|
10,832
|
|
||
Net income after taxes
|
|
$
|
54,588
|
|
|
|
$
|
39,356
|
|
Net income attributable to non-controlling interest
|
|
41,557
|
|
|
|
|
|||
Net income attributable to Rattler Midstream LP
|
|
$
|
13,031
|
|
|
|
|
||
|
|
|
|
|
|
||||
Operating Data:
|
|
|
|
|
|
||||
Throughput(1)
|
|
|
|
|
|
||||
Crude oil gathering volumes (Bbl/d)
|
|
97,293
|
|
|
|
74,567
|
|
||
Natural gas gathering volumes (MMBtu/d)
|
|
117,761
|
|
|
|
60,534
|
|
||
Produced water gathering and disposal volumes (Bbl/d)
|
|
941,628
|
|
|
|
711,198
|
|
||
Sourced water gathering volumes (Bbl/d)
|
|
446,713
|
|
|
|
352,603
|
|
(1)
|
Does not include volumes from the EPIC, Gray Oak, Wink to Webster, Amarillo Rattler or OMOG joint ventures.
|
|
Three Months Ended March 31,
|
|||||
|
2020
|
2019
|
||||
|
(In thousands)
|
|||||
Reconciliation of Net Income to Adjusted EBITDA:
|
|
|
||||
Net income
|
$
|
54,588
|
|
$
|
39,356
|
|
Depreciation, amortization and accretion
|
12,506
|
|
9,904
|
|
||
Depreciation related to equity method investments
|
3,443
|
|
—
|
|
||
Interest expense, net of amount capitalized
|
2,621
|
|
—
|
|
||
Interest expense related to equity method investments
|
323
|
|
—
|
|
||
Non-cash unit-based compensation expense
|
2,219
|
|
—
|
|
||
Other non-cash transactions
|
1,460
|
|
—
|
|
||
Provision for income taxes
|
3,820
|
|
10,832
|
|
||
Adjusted EBITDA
|
80,980
|
|
$
|
60,092
|
|
|
Less: Adjusted EBITDA attributable to non-controlling interest
|
(57,624
|
)
|
|
|||
Adjusted EBITDA attributable to Rattler Midstream LP
|
$
|
23,356
|
|
|
|
Three Months Ended March 31,
|
||||||
|
2020
|
|
2019
|
||||
|
(In thousands)
|
||||||
Cash Flow Data:
|
|
|
|
||||
Net cash provided by operating activities
|
$
|
97,987
|
|
|
$
|
55,240
|
|
Net cash used in investing activities
|
(74,806
|
)
|
|
(51,743
|
)
|
||
Net cash used in financing activities
|
(17,631
|
)
|
|
—
|
|
||
Net increase in cash
|
$
|
5,550
|
|
|
$
|
3,497
|
|
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
|
Exhibit Number
|
|
Description
|
2.1#
|
|
|
2.2#
|
|
|
3.1
|
|
|
3.2
|
|
|
3.3
|
|
|
3.4
|
|
|
3.5
|
|
|
3.6
|
|
|
3.7
|
|
|
10.1
|
|
|
10.2*#^
|
|
|
10.3*#^
|
|
|
10.4*#^
|
|
|
10.5*#^
|
|
|
31.1*
|
|
|
31.2*
|
|
|
32.1**
|
|
|
101
|
|
The following financial information from the Registrant’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2020, 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) Condensed Notes to Consolidated Financial Statements.
|
104
|
|
Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).
|
*
|
Filed herewith.
|
**
|
The certifications attached as Exhibit 32.1 accompany this Quarterly Report on Form 10-Q 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.
|
#
|
The schedules (or similar attachments) referenced in this agreement have been omitted in accordance with Item 601(a)(5) of Regulation S-K because the information contained therein is not material and is not otherwise publicly disclosed. A copy of any omitted schedule (or similar attachment) will be furnished supplementally to the Securities and Exchange Commission upon request.
|
^
|
Information in this agreement identified by brackets is confidential and has been excluded pursuant to Item 601(b)(10)(iv) of Regulation S-K because it (i) is not material and (ii) would likely cause competitive harm to the Registrant if publicly disclosed.
|
|
|
RATTLER MIDSTREAM LP
|
|
|
|
|
|
|
|
By:
|
RATTLER MIDSTREAM GP LLC,
|
|
|
|
its general partner
|
|
|
|
|
Date:
|
May 7, 2020
|
By:
|
/s/ Travis D. Stice
|
|
|
|
Travis D. Stice
|
|
|
|
Chief Executive Officer
|
|
|
|
(Principal Executive Officer)
|
|
|
|
|
Date:
|
May 7, 2020
|
By:
|
/s/ Teresa L. Dick
|
|
|
|
Teresa L. Dick
|
|
|
|
Chief Financial Officer
|
|
|
|
(Principal Financial Officer)
|
1.
|
Amendments. The Agreement is hereby amended as follows:
|
2.
|
Miscellaneous.
|
|
|
PRODUCER:
|
|
|
|
DIAMONDBACK E&P LLC
|
|
|
|
|
|
|
|
|
|
|
|
By:
|
/s/ Travis D. Stice
|
|
|
Name:
|
Travis D. Stice
|
|
|
Title:
|
CEO
|
|
|
|
|
|
|
DIAMONDBACK O&G LLC
|
|
|
|
|
|
|
|
|
|
|
|
By:
|
/s/ Travis D. Stice
|
|
|
Name:
|
Travis D. Stice
|
|
|
Title:
|
CEO
|
|
|
|
|
|
|
ENERGEN RESOURCES CORPORATION
|
|
|
|
|
|
|
|
|
|
|
|
By:
|
/s/ Travis D. Stice
|
|
|
Name:
|
Travis D. Stice
|
|
|
Title:
|
CEO
|
|
|
|
|
|
|
GATHERER:
|
|
|
|
RATTLER MIDSTREAM OPERATING LLC
|
|
|
|
|
|
|
|
|
|
|
|
By:
|
/s/ Kaes Van't Hof
|
|
|
Name:
|
Kaes Van't Hof
|
|
|
Title:
|
President
|
I.
|
Wells Subject to Conflicting Dedications:
|
II.
|
Excluded Wells:
|
1.
|
Amendments. The Agreement is hereby amended as follows:
|
2.
|
Miscellaneous.
|
|
|
PRODUCER:
|
|
|
|
DIAMONDBACK E&P LLC
|
|
|
|
|
|
|
|
|
|
|
|
By:
|
/s/ Travis D. Stice
|
|
|
Name:
|
Travis D. Stice
|
|
|
Title:
|
CEO
|
|
|
|
|
|
|
DIAMONDBACK O&G LLC
|
|
|
|
|
|
|
|
|
|
|
|
By:
|
/s/ Travis D. Stice
|
|
|
Name:
|
Travis D. Stice
|
|
|
Title:
|
CEO
|
|
|
|
|
|
|
GATHERER:
|
|
|
|
RATTLER MIDSTREAM LLC
|
|
|
|
|
|
|
|
|
|
|
|
By:
|
/s/ Kaes Van't Hof
|
|
|
Name:
|
Kaes Van't Hof
|
|
|
Title:
|
President
|
1.
|
Amendments. The Agreement is hereby amended as follows:
|
2.
|
Miscellaneous.
|
|
|
PRODUCER:
|
|
|
|
DIAMONDBACK E&P LLC
|
|
|
|
|
|
|
|
|
|
|
|
By:
|
/s/ Travis D. Stice
|
|
|
Name:
|
Travis D. Stice
|
|
|
Title:
|
CEO
|
|
|
|
|
|
|
DIAMONDBACK O&G LLC
|
|
|
|
|
|
|
|
|
|
|
|
By:
|
/s/ Travis D. Stice
|
|
|
Name:
|
Travis D. Stice
|
|
|
Title:
|
CEO
|
|
|
|
|
|
|
ENERGEN RESOURCES CORPORATION
|
|
|
|
|
|
|
|
|
|
|
|
By:
|
/s/ Travis D. Stice
|
|
|
Name:
|
Travis D. Stice
|
|
|
Title:
|
CEO
|
|
|
|
|
|
|
GATHERER:
|
|
|
|
RATTLER MIDSTREAM OPERATING LLC
|
|
|
|
|
|
|
|
|
|
|
|
By:
|
/s/ Kaes Van't Hof
|
|
|
Name:
|
Kaes Van't Hof
|
|
|
Title:
|
President
|
1.
|
The word “and” at the end of clause (xiv) in Exhibit D is hereby deleted.
|
2.
|
The period at the end of clause (xv) in Exhibit D is hereby deleted and replaced by a semi-colon.
|
3.
|
A new clause (xvi) is hereby inserted after clause (xv) in Exhibit D as set forth below:
|
4.
|
A new clause (xvii) is hereby inserted after clause (xvi) in Exhibit D as set forth below:
|
1.
|
Amendments. The Agreement is hereby amended as follows:
|
2.
|
Miscellaneous.
|
|
|
PRODUCER:
|
|
|
|
DIAMONDBACK E&P LLC
|
|
|
|
|
|
|
|
|
|
|
|
By:
|
/s/ Travis D. Stice
|
|
|
Name:
|
Travis D. Stice
|
|
|
Title:
|
CEO
|
|
|
|
|
|
|
DIAMONDBACK O&G LLC
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By:
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/s/ Travis D. Stice
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Name:
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Travis D. Stice
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Title:
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CEO
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SELLER:
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RATTLER MIDSTREAM LLC
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By:
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/s/ Kaes Van't Hof
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Name:
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Kaes Van't Hof
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Title:
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President
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1.
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Clause (viii) in Exhibit D is hereby amended and restated in its entirety as set forth below:
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2.
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The word “and” at the end of clause (xi) in Exhibit D is hereby deleted.
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3.
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The period at the end of clause (xii) in Exhibit D is hereby deleted and replaced by a semi-colon.
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4.
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A new clause (xiii) is hereby inserted after clause (xii) in Exhibit D as set forth below:
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5.
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A new clause (xiv) is hereby inserted after clause (xiii) in Exhibit D as set forth below:
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6.
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A new clause (xv) is hereby inserted after clause (xiv) in Exhibit D as set forth below:
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1.
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I have reviewed this Quarterly Report on Form 10-Q of Rattler Midstream LP (the “registrant”).
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2.
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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;
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3.
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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;
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4.
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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:
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(a)
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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;
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(b)
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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;
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(c)
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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
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(d)
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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
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5.
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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):
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(a)
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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
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(b)
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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.
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Date:
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May 7, 2020
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/s/ Travis D. Stice
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Travis D. Stice
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Chief Executive Officer
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Rattler Midstream GP LLC
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(as general partner of Rattler Midstream LP)
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1.
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I have reviewed this Quarterly Report on Form 10-Q of Rattler Midstream LP (the “registrant”).
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2.
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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;
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3.
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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;
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4.
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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:
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(a)
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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;
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(b)
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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;
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(c)
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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
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(d)
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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
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5.
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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):
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(a)
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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
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(b)
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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.
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Date:
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May 7, 2020
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/s/ Teresa L. Dick
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Teresa L. Dick
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Chief Financial Officer
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Rattler Midstream GP LLC
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(as general partner of Rattler Midstream LP)
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Date:
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May 7, 2020
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/s/ Travis D. Stice
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Travis D. Stice
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Chief Executive Officer
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Rattler Midstream GP LLC
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(as general partner of Rattler Midstream LP)
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Date:
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May 7, 2020
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/s/ Teresa L. Dick
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Teresa L. Dick
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Chief Financial Officer
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Rattler Midstream GP LLC
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(as general partner of Rattler Midstream LP)
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