GlobeNewswire Inc | Aug 4, 2021 04:01PM EDT

August 04, 2021

MIDLAND, Texas, Aug. 04, 2021 (GLOBE NEWSWIRE) -- Rattler Midstream LP (NASDAQ: RTLR) (Rattler or the Company), a subsidiary of Diamondback Energy, Inc. (NASDAQ: FANG) (Diamondback), today announced financial and operating results for the second quarter ended June30, 2021.

SECOND QUARTER 2021 HIGHLIGHTS

-- Q2 2021 consolidated net income (including non-controlling interest) of $54.5 million -- Q2 2021 consolidated Adjusted EBITDA (as defined and reconciled below) of $76.0 million -- Q2 2021 cash flow provided by operating activities of $75.7 million; Q2 2021 Operating Cash Flow Before Working Capital Changes (as defined and reconciled below) of $62.8 million -- Q2 2021 cash operated capital expenditures of $11.9 million; 2021 operated midstream capex guidance reduced to $30 - $50 million, a 43% decrease at the midpoint from previous guidance -- Q2 2021 consolidated Free Cash Flow (as defined and reconciled below) of $81.0 million; Q2 2021 Recurring Free Cash Flow (as defined and reconciled below) of $51.0 million -- Board of Directors of Rattler's general partner approved an increased cash distribution for the second quarter of 2021 of $0.25 per common unit ($1.00 annualized); implies a 9.8% annualized yield based on the August 3, 2021 closing unit price of $10.22 -- Repurchased approximately 0.5 million common units at an average unit price of $10.94 for a total cost of $5.2 million during the quarter -- Q2 2021 average produced water gathering and disposal volumes of 802 MBbl/d -- Q2 2021 average sourced water volumes of 242 MBbl/d; 20% of total sourced water volumes in Q2 2021 sourced from recycled produced water -- Q2 2021 average crude oil gathering volumes of 84 MBbl/d -- Q2 2021 average gas gathering volumes of 142 BBtu/d

The second quarter of 2021 was another strong operational performance for Rattler as volumes and operations normalized after the impact of the first quarter's weather events. Both the operated business and our equity method joint ventures witnessed a return to trend in both volumes and earnings, and the Rattler team did a tremendous job in controlling costs during the quarter. Accordingly, due to our strong financial position and with improved confidence in our free cash flow trajectory, Rattler is increasing its distribution by 25% to $1.00 annualized per common unit, stated Travis Stice, Chief Executive Officer of Rattlers general partner.

Mr. Stice continued, "Since the onset of the COVID-19 pandemic and the associated retrenchment of Rattler's and Diamondback's operations to focus on cash flow over growth, we have tasked the Rattler organization with cutting operational expense and capital expenditures to increase cash flow in an environment in which growth in volumes and midstream capacity is not called for. The results of these efforts are apparent as Rattler has generated over $100 million in recurring free cash flow in the first half of 2021, not including divestitures of non-core real estate and the Amarillo Rattler stake, which have netted another $30 million. This free cash, even after unitholder distributions and the common unit repurchase program, has enabled Rattler to end the quarter with no net balance on its revolving credit facility. Altogether, the strong financial position with peer-leading low leverage gives Rattler flexibility, indispensable during these volatile times, in executing its mandate of creating value for its unitholders. Whether by increasing return of capital to unitholders through the distribution or its common unit repurchase program, or taking advantage of the opportunities afforded through our strategic relationship with Diamondback, we will continue to prudently allocate capital to achieve this goal.

OPERATIONS AND FINANCIAL UPDATE

During the second quarter of 2021, the Company recorded total operating income of $38.8 million, an increase of 3% compared to the first quarter of 2021. During the second quarter of 2021, the Company recorded consolidated net income (including non-controlling interest) of $54.5 million, an increase of 110% from the first quarter of 2021. Second quarter 2021 Adjusted EBITDA (as defined and reconciled below) was $76.0 million, an increase of 16% from the first quarter of 2021.

Second quarter operated capital expenditures totaled $11.9 million and aggregate contributions to equity method joint ventures were $2.8 million. Rattler also received proceeds of $9.1 million in distributions from equity method investments during the quarter.

The following table summarizes the Company's throughput on its operated assets.

Three Months Ended June 30, Six Months Ended June 30, 2021 2020 2021 2020Crude oilgathering (Bbl/d) 84,014 91,256 84,609 94,275

Natural gasgathering (MMBtu/ 141,529 107,502 136,014 112,631 d)Produced watergathering and 801,967 771,337 783,878 856,483 disposal (Bbl/d)

Sourced watergathering (Bbl/d) 241,570 78,059 254,629 262,386

CASH DISTRIBUTION

On August 2, 2021, the Board of Directors of Rattler's general partner approved a cash distribution for the second quarter of 2021 of $0.25 per common unit, payable on August23, 2021 to unitholders of record at the close of business on August 16, 2021.

COMMON UNIT REPURCHASE PROGRAM

On October 29, 2020, the Board of Directors of Rattler's general partner approved a common unit repurchase program to acquire up to $100.0 million of Rattler's outstanding common units through December 31, 2021. Pursuant to this program, during the second quarter of 2021, the Company repurchased 475,000 common units at an average unit price of $10.94 per unit for a total cost of $5.2 million. From the end of the second quarter of 2021 through July 30, 2021, Rattler repurchased an additional 332,465 common units for a total cost of $3.4 million. In total from the program's inception through July 30, 2021, Rattler has repurchased 3,539,320 common units for a total cost of $34.5 million, utilizing 34% of the $100.0 million approved by the Board for the repurchase program.

DIVESTITURES

On April 30, 2021, Rattler and its joint venture partner, Amarillo Midstream, each sold its 50% interest in Amarillo Rattler, LLC (Amarillo Rattler) to EnLink Midstream for aggregate total gross potential consideration of $75.0 million, consisting of $50.0 million at closing, $10.0 million upon the first anniversary of closing and up to $15.0 million in contingent earn-out payments over a three-year span based upon Diamondback's development activity. Net of transaction expenses and working capital adjustments, Rattler received $23.5 million at closing, with an incremental $5.0 million due in April 2022.

On June 28, 2021, Rattler closed on the sale of one of its real estate properties located in Midland, Texas for proceeds of $9.1 million, including closing adjustments.

GUIDANCE

Below is Rattler's revised guidance for the full year 2021, with capital expenditures and equity method investment contributions updated to reflect the latest base operating plan.

Rattler Midstream LP Guidance 2021 Rattler Operated Volumes ^(a) Produced Water Gathering and Disposal (MBbl/d) 800 - 900Sourced Water (MBbl/d) 200 - 300Crude Oil Gathering (MBbl/d) 75 - 85Gas Gathering (BBtu/d) 120 - 140 Financial Metrics ($ millions except per unit metrics)Net Income $140 - $180Adjusted EBITDA $280 - $320Operated Midstream Capex $30 - $50Equity Method Investment Contributions^(b) $5 - $15Equity Method Investment Distributions^(b) $35 - $45Depreciation, Amortization & Accretion $50 - $70Distribution per Unit^(c) $0.90

(a)Does not include any volumes from the EPIC, Gray Oak, Wink to Webster, OMOG and Amarillo Rattler joint ventures(b)Includes the EPIC, Gray Oak, Wink to Webster, OMOG and Amarillo Rattler joint ventures(c)Represents distribution paid during calendar year

CONFERENCE CALL

Rattler will host a conference call and webcast for investors and analysts to discuss its results for the second quarter of 2021 on Thursday, August 5, 2021 at 10:00 a.m. CT. Participants should call (877) 288-2756 (United States/Canada) or (470)495-9481 (International) and use the confirmation code 4085657. A telephonic replay will be available from 1:00 p.m. CT on Thursday, August 5, 2021 through Thursday, August 12, 2021 at 1:00 p.m. CT. To access the replay, call (855) 859-2056 (United States/Canada) or (404) 537-3406 (International) and enter confirmation code 4085657. A live broadcast of the earnings conference call will also be available via the internet at www.rattlermidstream.comunder the Investors section of the site. A replay will also be available on the website following the call.

About Rattler Midstream LP

Rattler Midstream LP is a Delaware limited partnership formed by Diamondback Energy to own, operate, develop and acquire midstream and energy-related infrastructure assets. Rattler owns crude oil, natural gas and water-related midstream assets in the Permian Basin that provide services to Diamondback Energy and third party customers under primarily long-term, fixed-fee contracts. For more information, please visit www.rattlermidstream.com.

About Diamondback Energy, Inc.

Diamondback is an independent oil and natural gas company headquartered in Midland, Texas focused on the acquisition, development, exploration and exploitation of unconventional, onshore oil and natural gas reserves in the Permian Basin in West Texas. For more information, please visit www.diamondbackenergy.com.

Forward-Looking Statements

This news release contains forward-looking statements within the meaning of the federal securities laws. All statements, other than historical facts, that address activities that Rattler assumes, plans, expects, believes, intends or anticipates (and other similar expressions) will, should or may occur in the future are forward-looking statements. The forward-looking statements are based on managements current beliefs, based on currently available information, as to the outcome and timing of future events, including specifically the statements regarding expectations of plans, strategies, objectives and anticipated financial and operating results of Rattler, including Rattler's capital expenditure levels, asset sales and other guidance discussed above. These forward-looking statements involve certain risks and uncertainties that could cause the results to differ materially from those expected by the management of Rattler. Information concerning these risks and other factors can be found in Rattlers filings with the Securities and Exchange Commission (SEC), including its Forms 10-K, 10-Q and 8-K, which can be obtained free of charge on the SECs web site at http://www.sec.gov. Rattler undertakes no obligation to update or revise any forward-looking statement.

Rattler Midstream LPConsolidated Balance Sheets(unaudited, in thousands) June 30, December 31, 2021 2020Assets Current assets: Cash $ 17,550 $ 23,927 Accounts receivable?related party 38,395 57,447 Accounts receivable?third party, 10,586 5,658 netSourced water inventory 9,362 10,108 Other current assets 855 1,127 Total current assets 76,748 98,267 Property, plant and equipment: Land 85,826 85,826 Property, plant and equipment 1,018,174 1,012,777 Accumulated depreciation, amortization and (119,521 ) (100,728 ) accretion Property, plant and equipment, 984,479 997,875 netRight of use assets 235 574 Equity method investments 517,962 532,927 Real estate assets, net 85,045 96,687 Intangible lease assets, net 3,899 4,262 Deferred tax asset 67,323 73,264 Other assets 4,193 4,732 Total assets $ 1,739,884 $ 1,808,588 Liabilities and Unitholders? Equity Current liabilities: Accounts payable $ 90 $ 139 Accrued liabilities 39,621 42,508 Taxes payable 217 192 Short-term lease liability 235 574 Asset retirement obligations 79 35 Total current liabilities 40,242 43,448 Long-term debt 496,953 569,947 Asset retirement obligations 16,135 15,093 Total liabilities 553,330 628,488 Commitments and contingencies Unitholders? equity: General partner?Diamondback 859 899 Common units?public (41,075,836 unitsissued and outstanding as of June 30, 2021 375,773 385,189 and 42,356,637 units issued and outstandingas of December 31, 2020)Class B units?Diamondback (107,815,152units issued and outstanding as of June 30, 859 899 2021 and as of December 31, 2020)Accumulated other comprehensive income 10 (123 ) (loss) Total Rattler Midstream LP unitholders? 377,501 386,864 equityNon-controlling interest 809,053 793,638 Non-controlling interest in accumulated ? (402 ) other comprehensive income (loss)Total equity 1,186,554 1,180,100 Total liabilities and unitholders? $ 1,739,884 $ 1,808,588 equity

Rattler Midstream LPConsolidated Statements of Operations(unaudited, in thousands, except per unit data) Three Months Ended June 30, Six Months Ended June 30, 2021 2020 2021 2020Revenues: Revenues?related $ 91,579 $ 78,031 $ 178,657 $ 194,614 partyRevenues?third 5,967 7,175 14,088 16,275 partyOther income?related 2,542 1,470 5,082 2,988 partyOther income?third 1,043 2,059 2,112 4,253 party Total 101,131 88,735 199,939 218,130 revenuesCosts and expenses: Direct operating 26,299 37,378 58,810 70,252 expensesCost of goods sold(exclusive ofdepreciation and 10,298 4,744 19,109 20,705 amortization)

Real estateoperating 544 590 1,061 1,318 expensesDepreciation,amortization and 15,239 12,100 26,485 24,606 accretionImpairment and ? ? 3,371 ? abandonmentsGeneral andadministrative 4,956 4,175 9,590 8,689 expenses(Gain) loss ondisposal of 5,005 1,243 5,011 2,781 assets Total costs and 62,341 60,230 123,437 128,351 expensesIncome (loss) from 38,790 28,505 76,502 89,779 operationsOther income (expense):Interest income(expense), (8,235 ) (1,926 ) (15,545 ) (4,547 ) netGain (loss) on saleof equity method 22,989 ? 22,989 ? investmentsIncome (loss) fromequity method 4,472 (13,034 ) 1,649 (13,279 ) investments Total other income(expense), 19,226 (14,960 ) 9,093 (17,826 ) netNet income (loss)before income taxes 58,016 13,545 85,595 71,953

Provision for(benefit from) 3,539 1,083 5,210 4,903 income taxesNet income (loss) 54,477 12,462 80,385 67,050

Less: Net income(loss) attributable 42,032 9,640 61,925 51,197 to non-controllinginterest Net income (loss)attributable to $ 12,445 $ 2,822 $ 18,460 $ 15,853 Rattler Midstream LP

Net income (loss)attributable to limited partners percommon unit:Basic $ 0.30 $ 0.05 $ 0.42 $ 0.33 Diluted $ 0.30 $ 0.05 $ 0.42 $ 0.33 Weighted averagenumber of limited partner common unitsoutstanding:Basic 41,033 43,812 41,386 43,756 Diluted 41,033 43,812 41,386 43,756

Rattler Midstream LPConsolidated Statements of Cash Flows(unaudited, in thousands) Three Months Ended June 30, Six Months Ended June 30, 2021 2020 2021 2020Cash flows fromoperating activities:Net income (loss) $ 54,477 $ 12,462 $ 80,385 $ 67,050

Adjustments toreconcile net income(loss) to net cash provided byoperatingactivities: Provision fordeferred income 3,539 1,083 5,210 4,903 taxes Depreciation,amortization and 15,239 12,100 26,485 24,606 accretion (Gain) loss ondisposal of 5,005 1,243 5,011 2,781 assets Unit-basedcompensation 2,485 2,120 4,817 4,339 expense Impairment and ? ? 3,371 ? abandonments Gain (loss) onsale of equity (22,989 ) ? (22,989 ) ? methodinvestments (Income) loss fromequity method (4,472 ) 13,034 (1,649 ) 13,279 investments Distributions fromequity method 9,055 ? 9,055 ? investments Other 504 ? 1,007 ? Changes in operatingassets and liabilities: Accountsreceivable?related 7,843 (3,508 ) 19,052 28,166 party Accounts payable,accrued liabilities 2,567 (10,247 ) (3,525 ) (18,787 ) and taxespayable Other 2,491 5,590 2,182 5,527 Net cash provided by(used in) operating 75,744 33,877 128,412 131,864 activitiesCash flows frominvesting activities:Additions toproperty, plant and (11,853 ) (39,541 ) (17,713 ) (91,587 ) equipmentContributions toequity method (2,791 ) (33,469 ) (6,454 ) (66,032 ) investmentsDistributions fromequity method ? 8,109 9,107 17,870 investmentsProceeds from thesale of equity 23,455 ? 23,455 ? methodinvestmentsProceeds from thesale of real 9,118 ? 9,118 ? estateOther 250 ? 250 42 Net cash provided by(used in) investing 18,179 (64,901 ) 17,763 (139,707 ) activitiesCash flows fromfinancing activities:Proceeds fromborrowings from 12,000 72,000 24,000 99,000 creditfacilityPayments on credit (61,000 ) ? (98,000 ) ? facilityRepurchased units aspart of unit (5,198 ) ? (16,312 ) ? buybackDistribution to (8,183 ) (12,673 ) (16,446 ) (25,346 ) public Distribution to (21,583 ) (31,287 ) (43,166 ) (62,573 ) Diamondback Other (2,169 ) (2,029 ) (2,628 ) (2,701 ) Net cash provided by(used in) financing (86,133 ) 26,011 (152,552 ) 8,380 activitiesNet increase(decrease) in cash 7,790 (5,013 ) (6,377 ) 537

Cash at beginning of 9,760 16,183 23,927 10,633 periodCash at end of $ 17,550 $ 11,170 $ 17,550 $ 11,170 period

Rattler Midstream LPPipeline Infrastructure Assets(unaudited) As of June 30, 2021(miles)^(a) Delaware Basin Midland Basin Permian TotalCrude oil 112 46 158 Natural gas 159 ? 159 Produced water 270 249 519 Sourced water 27 74 101 Total 568 369 937

(a) Does not include any assets of the EPIC, Gray Oak, Wink to Webster, Amarillo Rattler or OMOG joint ventures.

Rattler Midstream LPCapacity/Capability(unaudited) As of June 30, 2021(capacity/capability)^ Delaware Midland Permian Utilization(a) Basin Basin TotalCrude oil gathering 225,000 65,000 290,000 30 %(Bbl/d)Natural gascompression (Mcf/d) 151,000 ? 151,000 78 %

Natural gas gathering 180,000 ? 180,000 65 %(Mcf/d)Produced watergathering and disposal 1,330,000 1,784,000 3,114,000 26 %(Bbl/d)Sourced watergathering (Bbl/d) 120,000 455,000 575,000 42 %

(a) Does not include any assets of the EPIC, Gray Oak, Wink to Webster, Amarillo Rattler or OMOG joint ventures.

Rattler Midstream LPThroughput(unaudited) Three Months Ended June 30, Six Months Ended June 30,(throughput)^(a) 2021 2020 2021 2020Crude oilgathering (Bbl/d) 84,014 91,256 84,609 94,275

Natural gasgathering (MMBtu/ 141,529 107,502 136,014 112,631 d)Produced watergathering and 801,967 771,337 783,878 856,483 disposal (Bbl/d)

Sourced watergathering (Bbl/d) 241,570 78,059 254,629 262,386

(a) Does not include any volumes of the EPIC, Gray Oak, Wink to Webster, Amarillo Rattler or OMOG joint ventures.

NON-GAAP FINANCIAL MEASURES

Adjusted EBITDA is a supplemental non-GAAP financial measure used by management and external users of its financial statements, such as industry analysts, investors, lenders and rating agencies. Management believes Adjusted EBITDA is useful because the measure allows it to more effectively evaluate the Company's operating performance and compare the results of its operations period to period without regard to its financing methods or capital structure.

The Company defines Adjusted EBITDA as net income (loss) attributable to Rattler Midstream LP plus net income (loss) attributable to non-controlling interest before interest expense (net of amount capitalized), depreciation, amortization and accretion on assets and liabilities of Rattler Midstream Operating LLC, its proportional depreciation and interest expense related to equity method investments, its proportional impairments and abandonments related to equity method investments, non-cash unit-based compensation expense, impairment and abandonments, (gain) loss on disposal of assets, (gain) loss from sale of equity method investment, provision for income taxes and other. The GAAP measure most directly comparable to Adjusted EBITDA is net income (loss). However, Adjusted EBITDA should not be considered an alternative to net income (loss) or any other measure of financial performance or liquidity presented in accordance with generally accepted accounting principles in the United States ("GAAP"). Adjusted EBITDA excludes some, but not all, items that affect net income (loss), and these measures may vary from those of other companies. As a result, Adjusted EBITDA as presented below may not be comparable to similarly titled measures of other companies.

The Company does not provide guidance on the reconciling items between forecasted net income (loss) and forecasted Adjusted EBITDA due to the uncertainty regarding timing and estimates of these items. Rattler provides a range for the forecasts of net income (loss) and Adjusted EBITDA to allow for the variability in timing and uncertainty of estimates of reconciling items between forecasted net income (loss) and forecasted Adjusted EBITDA. Therefore, the Company cannot reconcile forecasted net income (loss) to forecasted Adjusted EBITDA without unreasonable effort.

The following table presents a reconciliation of net income (loss), the most directly comparable GAAP financial measure, to Adjusted EBITDA for each of the periods indicated:

Rattler Midstream LPAdjusted EBITDA(unaudited, in thousands) Three Months Ended Six Months Ended June 30, June 30, 2021 2020 2021 2020Reconciliation ofNet Income (Loss) to Adjusted EBITDA:Net income (loss)attributable to $ 12,445 $ 2,822 $ 18,460 $ 15,853 Rattler Midstream LP

Net income (loss)attributable to 42,032 9,640 61,925 51,197 non-controllinginterestNet income (loss) 54,477 12,462 80,385 67,050

Interest expense,net of amount 8,235 1,926 15,545 4,547 capitalizedDepreciation,amortization and 15,239 12,100 26,485 24,606 accretionDepreciation andinterest expenserelated to equity 10,036 7,244 20,561 11,010 method investments

Impairments andabandonments related ? 15,839 2,933 15,839 to equity methodinvestmentsNon-cash unit-basedcompensation 2,485 2,120 4,817 4,339 expenseImpairment and ? ? 3,371 ? abandonments(Gain) loss ondisposal of 5,005 1,243 5,011 2,781 assetsGain (loss) on saleof equity method (22,989 ) ? (22,989 ) ? investmentsProvision for income 3,539 1,083 5,210 4,903 taxesOther 22 (138 ) 34 (216 ) Adjusted EBITDA 76,049 53,879 141,363 134,859

Less: AdjustedEBITDA attributable 55,084 38,288 102,219 95,912 to non-controllinginterestAdjusted EBITDAattributable to $ 20,965 $ 15,591 $ 39,144 $ 38,947 Rattler Midstream LP

Adjusted net income (loss) is a supplemental non-GAAP financial measure equal to net income (loss) adjusted for (gain) loss on disposal of assets, gain (loss) on sale of equity method investments and related income tax adjustments. Management believes adjusted net income (loss) is useful because the measure provides useful information to analysts and investors for analysis of its operating results on a consistent, comparable basis from period to period. The Company's computation of adjusted net income (loss) may not be comparable to other similarly titled measures of other companies or to such measure in our credit facility or any of our other contracts.

The following table presents a reconciliation of net income (loss) attributable to Rattler Midstream LP to adjusted net income (loss) for each of the periods indicated:

Rattler Midstream LPAdjusted Net Income (Loss)(unaudited, in thousands, except per unit data) Three Months Ended June 30, 2021 Amounts Amounts Per Dilutive ShareReconciliation of Net Income (Loss) to Adjusted Net Income:Net income (loss) attributable to Rattler $ 12,445 $ 0.30 Midstream LPNet income (loss) attributable to 42,032 1.02 non-controlling interestNet income (loss) 54,477 1.32 (Gain) loss on disposal of 5,005 0.12 assetsGain (loss) on sale of equity method (22,989 ) (0.55 ) investmentsAdjusted income (loss) excluding above 36,493 0.89 itemsIncome tax adjustment for above 1,168 0.03 itemsAdjusted Net Income (Loss) 37,661 0.92 Less: Adjusted net income (loss)attributable to non-controlling 29,001 0.71 interestAdjusted net income (loss) attributable to $ 8,660 $ 0.21 Rattler Midstream LP Weighted average common units outstanding:Basic 41,033 Diluted 41,033

Operating cash flow before working capital changes, which is a supplemental non-GAAP financial measure, represents net cash provided by operating activities as determined under GAAP without regard to changes in operating assets and liabilities. The GAAP financial measure most directly comparable to operating cash flow before working capital changes is net cash provided by operating activities. Management believes operating cash flow before working capital changes is an accepted measure which reflects cash flow from operating activities, additions to property, plant and equipment and net investments in its equity method investments across periods on a consistent basis. The Company also uses this measure because adjusted operating cash flow relates to the timing of cash receipts and disbursements that the Company may not control and may not relate to the period in which the operating activities occurred. This allows the Company to compare its operating performance with that of other companies without regard to financing methods and capital structure.

Free Cash Flow, which is a supplemental non-GAAP financial measure, is operating cash flow before working capital changes net of additions to property, plant, and equipment, contributions to equity method investments and distributions from equity method investments, proceeds from the sale of equity method investments, proceeds from the sale of real estate and other. Recurring Free Cash Flow, which is a supplemental non-GAAP financial measure, is Free Cash Flow less contributions to equity method investments, proceeds from the sale of equity method investments, proceeds from the sale of real estate and other investing cash flows. The GAAP financial measure most directly comparable to Free Cash Flow and Recurring Free Cash Flow is net cash provided by operating activities. Management believes that Free Cash Flow and Recurring Free Cash Flow are useful to investors as they provide the amount of cash available for reducing debt, investing in additional capital projects or paying dividends. These measures should not be considered as an alternative to, or more meaningful than, net cash provided by operating activities as an indicator of operating performance. The Company's computation of operating cash flow before working capital changes, Free Cash Flow and Recurring Free Cash Flow may not be comparable to other similarly titled measures of other companies.

The following tables present a reconciliation of net cash provided by operating activities to operating cash flow before working capital changes, to Free Cash Flow and to Recurring Free Cash Flow:

Rattler Midstream LPOperating Cash Flow(unaudited, in thousands) Three Months Ended June 30, Six Months Ended June 30, 2021 2020 2021 2020Net cash providedby operating $ 75,744 $ 33,877 $ 128,412 $ 131,864 activitiesLess: Changes incash due tochanges in operating assetsand liabilities:Accountsreceivable?related 7,843 (3,508 ) 19,052 28,166 partyAccounts payable,accruedliabilities and 2,567 (10,247 ) (3,525 ) (18,787 ) taxespayableOther 2,491 5,590 2,182 5,527 Total workingcapital changes 12,901 (8,165 ) 17,709 14,906

Operating cashflow before $ 62,843 $ 42,042 $ 110,703 $ 116,958 working capitalchanges

Rattler Midstream LPFree Cash Flow and Recurring Free Cash Flow(unaudited, in thousands) Three Months Ended June 30, Six Months Ended June 30, 2021 2020 2021 2020Operating cash flowbefore working $ 62,843 $ 42,042 $ 110,703 $ 116,958 capital changes

Additions toproperty, plant and (11,853 ) (39,541 ) (17,713 ) (91,587 ) equipmentContributions toequity method (2,791 ) (33,469 ) (6,454 ) (66,032 ) investmentsDistributions fromequity method ? 8,109 9,107 17,870 investmentsProceeds from thesale of equity 23,455 ? 23,455 ? methodinvestmentsProceeds from thesale of real 9,118 ? 9,118 ? estateOther 250 ? 250 42 Net cash providedby (used in) 18,179 (64,901 ) 17,763 (139,707 ) investingactivitiesFree Cash Flow 81,022 (22,859 ) 128,466 (22,749 )

Contributions toequity method 2,791 33,469 6,454 66,032 investmentsProceeds from thesale of equity (23,455 ) ? (23,455 ) ? methodinvestmentsProceeds from thesale of real (9,118 ) ? (9,118 ) ? estateOther (250 ) ? (250 ) (42 ) Recurring Free Cash $ 50,990 $ 10,610 $ 102,097 $ 43,241 Flow

Investor Contact:Adam Lawlis+1 432.221.7467IR@rattlermidstream.com Source: Rattler Midstream LP; Diamondback Energy, Inc.