Viper Energy Partners LP (NASDAQ:VNOM) Q4 2022 Earnings Call Transcript
Viper Energy Partners LP (NASDAQ:VNOM) Q4 2022 Earnings Call Transcript February 22, 2023
Operator: Good day and thank you for standing by. Welcome to the Viper Energy Partners Fourth Quarter 2022 Earnings Call. At this time, all participants are in listen-only mode. After the speaker presentation, there will be a question-and-answer session. Please be advised that today's conference is being recorded. I would like to now hand the conference call over to your speaker -- one of your speakers today that will be Mr. Adam Lawlis, Vice President of Investor Relations. Adam please go ahead.
Adam Lawlis: Thank you, Shannon. Good morning and welcome to Viper Energy Partners fourth quarter 2022 conference call. During our call today, we will reference an updated investor presentation which can be found on Viper's website. Representing Viper today are Travis Stice, CEO President. During this conference call, the participants may make certain forward-looking statements relating to the company's financial conditions, results of operations, plans, objectives, future performance, and businesses. We caution you that actual results could differ materially from those that are indicated in these forward-looking statements due to a variety of factors. Information concerning these factors can be found in the company's filings with the SEC. In addition, we will make reference to certain non-GAAP measures. The reconciliations with the appropriate GAAP measures can be found in our earnings release issued yesterday afternoon. I'll now turn the call over to Travis Stice.
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Travis Stice: Thank you, Adam. Welcome everyone and thank you for listening to Viper Energy Partners fourth quarter 202 conference call. The fourth quarter topped off a record year for Viper with quarterly ore production setting a company record on both an absolute and per unit basis for the third consecutive quarter. Additionally, as a result of our strong production and continued best-in-class margins, further supported by our disciplined capital allocation approach, we were able to deliver a multiple return of capital and financial initiatives during the quarter. During the fourth quarter, we reduced net debt by $100 million quarter-over-quarter, repurchased roughly 1 million units, and are scheduled to pay distribution that provides a greater than 6% annualized yield.
Looking ahead to 2023, we have initiated average production guidance for the full year that implies 8% year-over-year growth. Importantly, Viper can deliver this growth without spending a single dollar of capital and with most operators in the Permian maintaining roughly flat activity levels. Additionally, this production growth, even as we generated over $100 million in proceeds from non-core asset sales during 2022, including the sale of our Eagle Ford asset, which was producing roughly 250 barrels of oil per day or just over 1% of our current volumes. On the capital return front, Viper continued to execute on our opportunistic unit repurchase program during the fourth quarter, but at a slower pace than during the third quarter. As a result, we are set to pay $0.49 per unit distribution, which is flat quarter-over-quarter despite oil prices being down 10% over the same period.
Our combined base plus variable distribution represents a greater than 6% yield at today's unit price. In conclusion, the fourth quarter was an outstanding quarter for Viper and the forward outlook continues to improve as our high-quality asset base continues to attract outsized activity levels. Viper remains differentially positioned to grow production without having to spend a single dollar of development of acquisition capital and with only limited operating costs we will be mostly insulated from continued inflationary cost pressures. Given the midpoint of our 2023 production guidance, and assuming $75 WTI, we are expected to deliver almost 10% annualized free cash flow yield. Operator, please open the line for questions.
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