Diamondback, Viper report first quarter production increases

By Patrick C. Miller | April 16, 2018

Diamondback Energy Inc. and its subsidiary Viper Energy Partners LP reported 10 and 14 percent production increases respectively during the first quarter of 2018 from their Permian assets in west Texas.

Headquartered in Midland, Texas, Diamondback announced production of 102,600 barrels of oil equivalent per day (boepd), up from fourth quarter 2017 production of 92,900 boepd. Viper increased its production from 12,400 boepd in the previous quarter to 14,100 boepd in the first quarter this year.

Diamondback is running eleven drilling rigs and five dedicated completion crews. The company’s activities are primarily focused on the horizontal exploitation of multiple intervals within the Wolfcamp, Spraberry, Clearfork, Bone Spring and Cline formations of the Permian. Viper’s properties are focused on oil-weighted North American basins, primarily in the Permian.

Travis Stice, Diamondback CEO, said that over the past five years, the company has increased production from a starting point of about 2,500 barrels of oil equivalent per day (boepd), despite oil price fluctuations ranging from $26 to $110 per barrel. “This growth has been a direct result of an unwavering focus on low-cost operations, accretive growth through a disciplined returns-focused acquisition strategy and, above all, best in class execution of our operating plan,” he said.

During the first quarter, Diamondback’s average realized prices were $61.66 per barrel of oil, $2.20 per thousand cubic feet (Mcf) of natural gas and $24.64 per barrel of natural gas liquids, resulting in a total equivalent unhedged price of $50.55 per boe, up 12 percent from $45.31 per boe in the fourth quarter of 2017.

"Diamondback will remain disciplined and committed to full-cycle economics for both our forward operating plan and acquisition strategy,” Stice said. “We will continue to demonstrate best-in-class production growth within cash flow and add rigs as operating cash flow allows, with our eleventh operated rig recently beginning operations in the Delaware Basin."

Viper's first quarter 2018 average realized prices were $61.43 per barrel of oil, $2.22 per Mcf of natural gas and $24.17 per barrel of natural gas liquids. This resulted in a total equivalent price of $49.09 per boe, up 17 percent year over year from $41.80 per boe in in the first quarter of 2017 and an increase of 12 percent from the 2017 fourth quarter total equivalent price of $43.76 per boe.

The board of directors of Viper's general partner declared a cash distribution of 48 cents per common unit for the first quarter of the year. Cash distribution increased 4 percent over the fourth quarter of 2017. This distribution represents an approximate 7.5 percent yield based on the closing price for Viper's common units on April 9.

Stice said Viper's proposed tax status election to a taxable entity will expand its investor base and allow the company to consolidate the highly fragmented minerals market.  “Viper offers investors a unique value proposition as the only exclusively onshore-focused high-growth E&P income vehicle, with a 7.5 percent current yield that will continue to grow with Diamondback and Permian Basin production," he noted.