GlobeNewswire Inc | Nov 1, 2021 04:01PM EDT

November 01, 2021

MIDLAND, Texas, Nov. 01, 2021 (GLOBE NEWSWIRE) -- Viper Energy Partners LP (NASDAQ:VNOM) (Viper or the Company), a subsidiary of Diamondback Energy, Inc. (NASDAQ:FANG) (Diamondback), today announced financial and operating results for the third quarter ended September30, 2021.

THIRD QUARTER HIGHLIGHTS

-- Q3 2021 average production of 16,087 bo/d (27,620 boe/d) -- Q3 2021 consolidated net income (including non-controlling interest) of $73.4 million; net income attributable to Viper Energy Partners LP of $16.8 million, or $0.26 per common unit -- Adjusted net income (as defined and reconciled below) of $57.7 million, or $0.90 per common unit -- Q3 2021 cash distribution of $0.38 per common unit, representing approximately 70% of total cash available for distribution of $0.54 per common unit; $0.38 distribution is up 15% quarter over quarter and implies a 6.9% annualized yield based on the October 29, 2021 unit closing price of $22.05 -- Consolidated adjusted EBITDA (as defined and reconciled below) of $92.6 million and cash available for distribution to Vipers common units (as reconciled below) of $34.3 million -- Repurchased 765,512 common units in Q3 2021 for an aggregate of $13.7million -- Ended the third quarter of 2021 with total long-term debt of $571.9 and net debt of $530.4 million (as defined and reconciled below) -- 223 total gross (3.1 net 100% royalty interest) horizontal wells turned to production on Vipers acreage during Q3 2021 with an average lateral length of 10,163 feet -- As previously announced, closed acquisition from Swallowtail Royalties LLC and Swallowtail Royalties II LLC; adds approximately 2,313 net royalty acres in the Northern Midland Basin, roughly 62% of which are operated by Diamondback -- Initiating average daily production guidance for Q4 2021 and Q1 2022 of 17,000 to 17,750 bo/d (28,250 to 29,500 boe/d) -- Increasing full year 2021 average daily production guidance to 16,250 to 16,500 bo/d (27,250 to 27,750 boe/d) -- As of October 11, 2021, there were approximately 570 gross horizontal wells in the process of active development on Vipers acreage in which Viper expects to own an average 1.7% net royalty interest (9.5 net 100% royalty interest wells) -- Approximately 492 gross (9.3 net 100% royalty interest) line-of-sight wells on Vipers acreage that are not currently in the process of active development, but for which Viper has visibility to the potential of future development in coming quarters, based on Diamondbacks current completion schedule and third party operators permits -- Approximately 60% of distributions paid in 2021 are reasonably estimated to constitute non-taxable reductions to the tax basis, and not dividends, for U.S. federal income tax purposes

During the third quarter, Viper saw third party operated net wells turned to production on our acreage rebound to their highest level since the first quarter of 2020. As a result of our continued strong production, and further enhanced by our high-margin exposure to increasing commodity prices, Vipers cash available for distribution increased 15% quarter over quarter to $0.54 per common unit, stated Travis Stice, Chief Executive Officer of Vipers General Partner.

Mr. Stice continued, Following the recent closing of the Swallowtail acquisition, Viper has unprecedented, high confidence visibility into Diamondbacks forward development plan that is expected to bolster oil production for Viper not only for the next several quarters, but also for years to come. With a tailwind to cash flows as our defensive hedges placed in 2020 roll off at the end of this year, we look forward to continuing to generate robust amounts of free cash flow and subsequently using that cash to both reduce debt and increase returns to unitholders.

FINANCIAL UPDATE

Vipers third quarter 2021 average unhedged realized prices were $67.67 per barrel of oil, $3.61 per Mcf of natural gas and $30.66 per barrel of natural gas liquids, resulting in a total equivalent realized price of $50.24/boe.

During the third quarter of 2021, the Company recorded total operating income of $128.0 million and consolidated net income (including non-controlling interest) of $73.4 million.

As of September30, 2021, the Company had a cash balance of $41.5 million and total long-term debt outstanding (excluding debt issuance, discounts and premiums) of $571.9 million, resulting in net debt (as defined and reconciled below) of $530.4 million. Vipers outstanding long-term debt as of September30, 2021 consisted of $479.9 million in aggregate principal amount of its 5.375% Senior Notes due 2027 and $92.0 million in borrowings on its revolving credit facility, leaving $408.0 million available for future borrowings and $449.5 million of total liquidity.

THIRD QUARTER 2021 CASH DISTRIBUTION & CAPITAL RETURN PROGRAM

The Board of Directors of Vipers General Partner declared a cash distribution for the three months ended September 30, 2021 of $0.38 per common unit. The distribution is payable on November 18, 2021 to eligible common unitholders of record at the close of business on November 11, 2021. This distribution represents approximately 70% of total cash available for distribution.

On May 20, 2021 and August 19, 2021, Viper made cash distributions to its common unitholders and subsequently has reasonably estimated that a portion of such distributions, as well as the distribution payable on November 18, 2021, should not constitute dividends for U.S. federal income tax purposes. Rather, approximately 60% of these distributions are estimated to constitute non-taxable reductions to the tax basis of each distribution recipients ownership interest in Viper. The Form 8937 containing additional information may be found on www.viperenergy.com under the Investor Relations section of the site.

During the third quarter of 2021, Viper repurchased 765,512 common units for an aggregate of $13.7million. In total through September 30, 2021, the Company had repurchased 4,083,640 common units at an average price of $14.10 per unit.

OPERATIONS AND ACQUISITIONS UPDATE

During the third quarter of 2021, Viper estimates that 223 gross (3.1 net 100% royalty interest) horizontal wells with an average royalty interest of 1.4% were turned to production on its existing acreage position with an average lateral length of 10,163 feet. Of these 223 gross wells, Diamondback is the operator of 44 gross wells with an average royalty interest of 4.0%, and the remaining 179 gross wells, with an average royalty interest of 0.7%, are operated by third parties.

During the third quarter of 2021, Viper acquired 38 net royalty acres for an aggregate purchase price of approximately $5.5 million, bringing the Companys footprint of mineral and royalty interests as of September30, 2021 to a total of 24,368 net royalty acres.

Subsequent to the end of the third quarter, Viper completed the acquisition of certain mineral and royalty interests from Swallowtail Royalties LLC and Swallowtail Royalties II LLC for approximately 15.25 million common units in Viper and $225.0 million in cash.On October 1, 2021, an additional $190 million was borrowed under the revolving credit facility to fund a portion of the cash purchase price for the Swallowtail acquisition.

The mineral and royalty interests acquired in the Swallowtail acquisition represent approximately 2,313 net royalty acres primarily in the Northern Midland Basin, of which approximately 62% are operated by Diamondback. As a result of this acquisition,Vipers footprint of mineral and royalty interests increased to a total of 26,681 net royalty acres as of October 1, 2021.

The following table summarizes Vipers gross well information:

Diamondback Third Party Total Operated OperatedHorizontal wells turned to production (third quarter 2021)^(1):Gross wells 44 179 223 Net 100% royalty interest wells 1.8 1.3 3.1 Average percent net royalty interest 4.0 % 0.7 % 1.4 % Horizontal producing well count (as of October 11, 2021):Gross wells 1,295 4,282 5,577 Net 100% royalty interest wells 97.7 58.4 156.1 Average percent net royalty interest 7.5 % 1.4 % 2.8 % Horizontal active development well count (as of October 11, 2021):Gross wells 103 467 570 Net 100% royalty interest wells 5.8 3.7 9.5 Average percent net royalty interest 5.7 % 0.8 % 1.7 % Line of sight wells (as of October 11, 2021):Gross wells 107 385 492 Net 100% royalty interest wells 5.7 3.6 9.3 Average percent net royalty interest 5.3 % 0.9 % 1.9 %

(1) Average lateral length of 10,163 feet.

There continues to be active development across Vipers asset base with near-term activity expected to be driven primarily by Diamondback operations. The 570 gross wells currently in the process of active development are those wells that have been spud and are expected to be turned to production within approximately the next six to eight months. Further in regard to the active development on Vipers asset base, there are currently 35 gross rigs operating on Vipers acreage, five of which are operated by Diamondback. The 492 line-of-sight wells are those that are not currently in the process of active development, but for which Viper has reason to believe that they will be turned to production within approximately the next 15 to 18 months. The expected timing of these line-of-sight wells is based primarily on permitting by third party operators or Diamondbacks current expected completion schedule. Existing permits or active development of Vipers royalty acreage does not ensure that those wells will be turned to production.

GUIDANCE UPDATE

Below is Vipers updated guidance for the full year 2021, as well as average production guidance for the fourth quarter of 2021 and first quarter of 2022.

Viper Energy Partners Q4 2021 / Q1 2022 Net Production - MBo/d 17.00 - 17.75Q4 2021 / Q1 2022 Net Production - MBoe/d 28.25 - 29.50Full Year 2021 Net Production - MBo/d 16.25 - 16.50Full Year 2021 Net Production - MBoe/d 27.25 - 27.75 Unit costs ($/boe) Depletion $9.50 - $10.50Cash G&A $0.60 - $0.80Non-Cash Unit-Based Compensation $0.10 - $0.25Interest Expense^(1) $3.25 - $3.40 Production and Ad Valorem Taxes (% of Revenue)^ (2) 7%

Includes actual interest expense for the first three quarters of 2021 plus(1) expected interest for the remainder of 2021 assuming $480.0 million in principal of senior notes and $250.0 million drawn on the revolver.(2) Includes production taxes of 4.6% for crude oil and 7.5% for natural gas and natural gas liquids and ad valorem taxes.

CONFERENCE CALL

Viper will host a conference call and webcast for investors and analysts to discuss its results for the third quarter of 2021 on Tuesday, November 2, 2021 at 10:00 a.m. CT. Participants should call (844) 400-1537 (United States/Canada) or (703) 326-5198 (International) and use the confirmation code 8077109. A telephonic replay will be available from 1:00 p.m. CT on Tuesday, November 2, 2021 through Tuesday, November 9, 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 8077109. A live broadcast of the earnings conference call will also be available via the internet at www.viperenergy.com under the Investor Relations section of the site. A replay will also be available on the website following the call.

About Viper Energy Partners LP

Viper is a limited partnership formed by Diamondback to own, acquire and exploit oil and natural gas properties in North America, with a focus on owning and acquiring mineral and royalty interests in oil-weighted basins, primarily the Permian Basin. For more information, please visit www.viperenergy.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 primarily 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 Viper 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 the current volatile industry and macroeconomic conditions, volatile commodity prices, production levels on properties in which Viper has mineral and royalty interests, governmental actions on environmental policies and regulations impacting Viper and its operators, severe weather conditions, any acquisitions or dispositions, Diamondbacks plans for developing Vipers acreage discussed above, development activity by other operators, Vipers cash distribution policy and the impact of the COVID-19 pandemic. These forward-looking statements involve certain risks and uncertainties that could cause the results to differ materially from those expected by the management of Viper. Information concerning these risks and other factors can be found in Vipers filings with the Securities and Exchange Commission, including its Forms 10-K, 10-Q and 8-K, which can be obtained free of charge on the Securities and Exchange Commissions web site at http://www.sec.gov. Viper undertakes no obligation to update or revise any forward-looking statement.

Viper Energy Partners LPConsolidated Balance Sheets(unaudited, in thousands, except unit amounts) September 30, December 31, 2021 2020Assets Current assets: Cash and cash equivalents $ 41,515 $ 19,121 Royalty income receivable (net of allowance for 47,133 32,210 credit losses)Royalty income receivable?related party 22,022 1,998 Other current assets 654 665 Total current assets 111,324 53,994 Property: Oil and natural gas interests, full cost methodof accounting ($1,296,765 and $1,364,906 excluded 2,902,270 2,895,542 from depletion at September30, 2021 and December31, 2020, respectively)Land 5,688 5,688 Accumulated depletion and impairment (570,406 ) (496,176 )Property, net 2,337,552 2,405,054 Funds held in escrow 30,025 ? Other assets 3,567 2,327 Total assets $ 2,482,468 $ 2,461,375 Liabilities and Unitholders? Equity Current liabilities: Accounts payable $ 208 $ 43 Accrued liabilities 26,000 18,262 Derivative instruments 35,357 26,593 Total current liabilities 61,565 44,898 Long-term debt, net 564,452 555,644 Derivative instruments 697 ? Total liabilities 626,714 600,542 Commitments and contingencies Unitholders? equity: General partner 749 809 Common units (63,830,715 units issued andoutstanding as of September30, 2021 and 580,992 633,415 65,817,281 units issued and outstanding as ofDecember 31, 2020)Class B units (90,709,946 units issued andoutstanding September30, 2021 and December 31, 956 1,031 2020)Total Viper Energy Partners LP unitholders? 582,697 635,255 equityNon-controlling interest 1,273,057 1,225,578 Total equity 1,855,754 1,860,833 Total liabilities and unitholders? equity $ 2,482,468 $ 2,461,375

Viper Energy Partners LPConsolidated Statements of Operations(unaudited, in thousands, except per unit data) Three Months Ended Nine Months Ended September 30, September 30, 2021 2020 2021 2020Operating income: Royalty income $ 127,649 $ 62,584 $ 337,619 $ 171,857 Lease bonus 223 40 1,032 1,685 incomeOther operating 132 318 479 761 incomeTotal operating 128,004 62,942 339,130 174,303 incomeCosts and expenses: Production and ad valorem 8,625 5,049 23,426 14,306 taxesDepletion 25,366 24,780 74,230 72,204 General andadministrative 1,735 1,811 6,118 6,160 expensesTotal costs and 35,726 31,640 103,774 92,670 expensesIncome (loss) from 92,278 31,302 235,356 81,633 operationsOther income (expense): Interest expense, (8,328 ) (8,238 ) (24,161 ) (24,870 )netGain (loss) on derivative (9,599 ) (5,084 ) (70,649 ) (47,469 )instruments, netGain (loss) onrevaluation of ? (1,984 ) ? (8,661 )investmentOther income, net ? 188 77 1,111 Total other expense, (17,927 ) (15,118 ) (94,733 ) (79,889 )netIncome (loss) before 74,351 16,184 140,623 1,744 income taxesProvision for (benefitfrom) income 906 ? 941 142,466 taxesNet income (loss) 73,445 16,184 139,682 (140,722 )Net income (loss)attributable to 56,613 16,948 121,208 23,963 non-controllinginterestNet income (loss)attributable to Viper $ 16,832 $ (764 ) $ 18,474 $ (164,685 )Energy Partners LP

Net income (loss)attributable to common limited partner units:Basic $ 0.26 $ (0.01 ) $ 0.29 $ (2.43 )Diluted $ 0.26 $ (0.01 ) $ 0.29 $ (2.43 )Weighted average numberof common limited partner units outstanding:Basic 64,152 67,847 64,724 67,832 Diluted 64,241 67,847 64,815 67,832

Viper Energy Partners LPConsolidated Statements of Cash Flows(unaudited, in thousands) Three Months Ended Nine Months Ended September 30, September 30, 2021 2020 2021 2020Cash flows from operating activities:Net income (loss) $ 73,445 $ 16,184 $ 139,682 $ (140,722 )Adjustments to reconcilenet income (loss) to net cash provided by operatingactivities:Deferred income tax ? ? ? 142,466 expense (benefit)Depletion 25,366 24,780 74,230 72,204 (Gain) loss on derivative 9,599 5,084 70,649 47,469 instruments, netNet cash receipts(payments) on (25,306 ) (16,164 ) (61,188 ) (18,718 )derivatives(Gain) loss on revaluation ? 1,984 ? 8,661 of investmentOther 1,340 873 3,332 2,681 Changes in operating assets and liabilities:Royalty income (5,122 ) 10 (14,923 ) 25,981 receivableRoyalty incomereceivable?related (18,343 ) (13,994 ) (20,024 ) (4,335 )partyOther 9,013 8,586 7,914 7,519 Net cash provided by (usedin) operating 69,992 27,343 199,672 143,206 activitiesCash flows from investing activities:Acquisitions of oil andnatural gas (5,909 ) 764 (6,728 ) (64,508 )interestsOther ? 7,360 ? 7,360 Net cash provided by (usedin) investing (5,909 ) 8,124 (6,728 ) (57,148 )activitiesCash flows from financing activities:Proceeds from borrowingsunder credit 62,000 3,000 87,000 95,000 facilityRepayment on credit (32,000 ) (30,000 ) (79,000 ) (65,000 )facilityRepayment of senior ? (5,910 ) ? (19,697 )notesRepurchased units as part (13,740 ) ? (33,562 ) ? of unit buybackDistributions to public (20,995 ) (2,015 ) (46,102 ) (38,943 )

Distributions to (30,201 ) (2,764 ) (65,913 ) (53,112 )Diamondback Other (29 ) (67 ) (2,948 ) (534 )Net cash provided by (usedin) financing (34,965 ) (37,756 ) (140,525 ) (82,286 )activitiesNet increase (decrease) incash and cash 29,118 (2,289 ) 52,419 3,772 equivalentsCash, cash equivalents andrestricted cash at 42,422 9,663 19,121 3,602 beginning ofperiodCash, cash equivalents andrestricted cash at end of $ 71,540 $ 7,374 $ 71,540 $ 7,374 period

Viper Energy Partners LPSelected Operating Data(unaudited) Three Three Three Months Months Months Ended Ended Ended September June 30, September 30, 2021 2021 30, 2020Production Data: Oil (MBbls) 1,480 1,503 1,456 Natural gas (MMcf) 3,347 3,219 3,111 Natural gas liquids (MBbls) 503 449 455

Combined volumes (MBOE)^(1) 2,541 2,489 2,430

Average daily oil volumes (BO/d) 16,087 16,516 15,829

Average daily combined volumes (BOE/d) 27,620 27,352 26,409

Average sales prices: Oil ($/Bbl) $ 67.67 $ 62.51 $ 36.80 Natural gas ($/Mcf) $ 3.61 $ 2.96 $ 1.07 Natural gas liquids ($/Bbl) $ 30.66 $ 22.21 $ 12.44

Combined ($/BOE)^(2) $ 50.24 $ 45.58 $ 25.76 Oil, hedged ($/Bbl)^(3) $ 50.57 $ 48.58 $ 27.65 Natural gas, hedged ($/Mcf)^(3) $ 3.61 $ 2.96 $ 0.16

Natural gas liquids ($/Bbl)^(3) $ 30.66 $ 22.21 $ 12.44

Combined price, hedged ($/BOE)^(3) $ 40.28 $ 37.18 $ 19.11

Average Costs ($/BOE): Production and ad valorem $ 3.39 $ 3.28 $ 2.08 taxesGeneral and administrative - cash 0.59 0.73 0.63 component^(4)Total operating expense - $ 3.98 $ 4.01 $ 2.71 cash General and administrative - non-cashunit compensation $ 0.10 $ 0.14 $ 0.11 expenseInterest expense, net $ 3.28 $ 3.20 $ 3.39 Depletion $ 9.98 $ 9.63 $ 10.20

(1) Bbl equivalents are calculated using a conversion rate of six Mcf per one Bbl.(2) Realized price net of all deducts for gathering, transportation and processing.(3) Hedged prices reflect the impact of cash settlements of our matured commodity derivative transactions on our average sales prices.(4) Excludes non-cash unit-based compensation expense for the respective periods presented.

NON-GAAP FINANCIAL MEASURES

Adjusted EBITDA is a supplemental non-GAAP financial measure that is used by management and external users of our financial statements, such as industry analysts, investors, lenders and rating agencies. Viper defines Adjusted EBITDA as net income (loss) attributable to Viper Energy Partners LP plus net income (loss) attributable to non-controlling interest (net income (loss)) before interest expense, net, non-cash unit-based compensation expense, depletion expense, impairment expense, non-cash (gain) loss on derivative instruments, (gain) loss on extinguishment of debt and provision for (benefit from) income taxes, if any. Adjusted EBITDA is not a measure of net income as determined by United States generally accepted accounting principles (GAAP). Management believes Adjusted EBITDA is useful because it allows them to more effectively evaluate Vipers operating performance and compare the results of its operations from period to period without regard to its financing methods or capital structure. Adjusted EBITDA should not be considered as an alternative to, or more meaningful than, net income, royalty income, cash flow from operating activities or any other measure of financial performance or liquidity presented as determined in accordance with GAAP. Certain items excluded from Adjusted EBITDA are significant components in understanding and assessing a companys financial performance, such as a companys cost of capital and tax structure, as well as the historic costs of depreciable assets, none of which are components of Adjusted EBITDA.

Viper defines cash available for distribution generally as an amount equal to its Adjusted EBITDA for the applicable quarter less cash needed for income taxes payable, debt service, contractual obligations, fixed charges and reserves for future operating or capital needs that the board of directors of Vipers general partner may deem appropriate, cash paid for tax withholding on vested common units, distribution equivalent rights and preferred distributions, if any. Management believes cash available for distribution is useful because it allows them to more effectively evaluate Vipers operating performance excluding the impact of non-cash financial items and short-term changes in working capital. Vipers computations of Adjusted EBITDA and cash available for distribution may not be comparable to other similarly titled measures of other companies or to such measure in its credit facility or any of its other contracts.

The following tables present a reconciliation of the GAAP financial measure of net income (loss) to the non-GAAP financial measures of Adjusted EBITDA and cash available for distribution:

Viper Energy Partners LP(unaudited, in thousands, except per unit data) Three Months Ended September 30, 2021Net income (loss) attributable to Viper Energy Partners LP $ 16,832

Net income (loss) attributable to non-controlling 56,613 interestNet income (loss) 73,445 Interest expense, net 8,328 Non-cash unit-based compensation expense 243 Depletion 25,366 Non-cash (gain) loss on derivative instruments (15,707 )Provision for (benefit from) income taxes 906 Consolidated Adjusted EBITDA 92,581 Less: Adjusted EBITDA attributable to non-controlling interest^ 54,269 (1)Adjusted EBITDA attributable to Viper Energy Partners LP $ 38,312

Adjustments to reconcile Adjusted EBITDA to cash available for distribution:Income taxes payable $ (906 )Debt service, contractual obligations, fixed charges and (2,996 )reservesDistribution equivalent rights payments (62 )Preferred distributions (45 )Cash available for distribution to Viper Energy Partners LP $ 34,303 unitholders Common limited partner units outstanding 63,831 Cash available for distribution per limited partner $ 0.54 unitCash per unit approved for distribution $ 0.38

(1) Does not take into account special income allocation consideration.

Adjusted net income (loss) is a non-GAAP financial measure equal to net income (loss) attributable to Viper Energy Partners, LP plus net income (loss) attributable to non-controlling interest adjusted for impairment expense, non-cash (gain) loss on derivative instruments, (gain) loss on extinguishment of debt and related income tax adjustments, if any. The Companys computation of adjusted net income 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. Management believes Adjusted Net Income helps investors in the oil and natural gas industry to measure and compare the Companys performance to other oil and natural gas companies by excluding from the calculation items that can vary significantly from company to company depending upon accounting methods, the book value of assets and other non-operational factors.

The following table presents a reconciliation of net income (loss) attributable to Viper Energy Partners LP to adjusted net income (loss):

Viper Energy Partners LPAdjusted Net Income (Loss)(unaudited, in thousands, except per unit data) Three Months Ended September 30, 2021 Amounts Amounts Per Diluted UnitNet income (loss) attributable to Viper Energy $ 16,832 $ 0.26 Partners LPNet income (loss) attributable to 56,613 0.88 non-controlling interestNet income (loss) 73,445 1.14 Non-cash (gain) loss on derivative instruments, (15,707 ) (0.24 )netAdjusted net income (loss) 57,738 0.90 Less: Adjusted net income (loss) attributed to 43,962 0.69 non-controlling interestsAdjusted net income (loss) attributable to $ 13,776 $ 0.21 Viper Energy Partners LP Weighted average common units outstanding: Basic 64,152 Diluted 64,241

RECONCILIATION OF LONG-TERM DEBT TO NET DEBT

The Company defines net debt as debt (excluding debt issuance, discounts and premiums) less cash equivalents. Net debt should not be considered an alternative to, or more meaningful than, total debt, the most directly comparable GAAP measure. Management uses net debt to determine the Company's outstanding debt obligations that would not be readily satisfied by its cash and cash equivalents on hand. The Company believes this metric is useful to analysts and investors in determining the Company's leverage position because the Company has the ability to, and may decide to, use a portion of its cash and cash equivalents to reduce debt.

September Net Q3 September 30, Principal June 30, March 31, December 31, 30, 2021 Borrowings/ 2021 2021 2020 2020 (Repayments) (in thousands)Total long-term debt^(1) $ 571,938 $ 30,000 $ 541,938 $ 536,938 $ 563,938 $ 606,438

Cash and cash (41,515 ) (42,422 ) (11,727 ) (19,121 ) (7,374 )equivalentsNet debt $ 530,423 $ 499,516 $ 525,211 $ 544,817 $ 599,064

(1) Excludes debt issuance, discounts & premiums.

Derivatives

As of the filing date, the Company had the following outstanding derivative contracts. The Companys derivative contracts are based upon reported settlement prices on commodity exchanges, with crude oil derivative settlements based on New York Mercantile Exchange West Texas Intermediate pricing and Crude Oil Brent. When aggregating multiple contracts, the weighted average contract price is disclosed.

Crude Oil (Bbls/day, $/Bbl) Q4 2021 Q1 2022 Q2 2022Collars - WTI (Cushing) 10,000 2,500 2,000 Floor Price $ 30.00 $ 45.00 $ 45.00 Ceiling Price $ 43.05 $ 79.55 $ 80.15 Deferred Premium Puts - WTI (Cushing) ? 9,500 8,000 Strike $ ? $ 47.51 $ 47.50 Premium $ ? $ (1.57 ) $ (1.55 )

Natural Gas (Mmbtu/day, $/Mmbtu) Q1 2022 Q2 2022 Q3 2022 Q4 2022Costless Collars - Henry 20,000 20,000 20,000 20,000 HubFloor Price $ 2.50 $ 2.50 $ 2.50 $ 2.50 Ceiling Price $ 4.62 $ 4.62 $ 4.62 $ 4.62

Investor Contacts:Adam Lawlis+1 432.221.7467alawlis@viperenergy.com

Austen Gilfillian+1 432.221.7420agilfillian@viperenergy.com

Source: Viper Energy Partners LP; Diamondback Energy, Inc.